Latest News & Tips                                                                                                           September 2007

Fringe Benefits for Cars

The Tax Office is aware that claiming FBT isn't always straightforward, so detailed information is provided on the Tax Office's dedicated web page for employers www.ato.gov.au/employers .

Three of the areas that employers are getting wrong are:

• logbooks do not provide enough information about the car's use
• where a car is garaged at an employee's residence and the employer is claiming substantial business use for the car using the operating cost method, but there is no record in the logbooks of business travel being made
• employee contributions are incorrectly treated for income tax and GST purposes.

An employer using the operating-cost method to calculate the taxable value of a car fringe benefit needs to include the following details for each business journey:

• the date on which the journey began and on which it ended
• the odometer readings at the start and end of each journey, and
• the kilometres travelled and the purpose of the journey.

Entries made under the category of ‘purpose of the journey’ must be in English and detailed enough to show why a journey was for business – simply describing a journey as ‘business’ or ‘miscellaneous business’ is not enough.

Car users should also be aware of FBT obligations that may arise under the ‘home garaging rule’. In particular, a car garaged at an employee’s home is, in most instances, considered to be available for private use.

For more information on car fringe benefits, see the Tax Office publication Fringe benefits tax: a guide for employers which is available from www.ato.gov.au/employers .

6 September 2007

Please note: There is a common misconception that utes and tradesmen type vehicles are automatically exempt from FBT. That is clearly not the case. There is specific legislation in place to ensure that these vehicles come within the usual “private use” rules where there is an element of private use. There are also requirements for record keeping in these cases so be aware!

Yes Big Brother is Watching!

Seven years jail for $700,000 tax fraud   A Mosman man was today sentenced to seven years jail by the Downing Centre District Court for activity statement fraud of $714,077. Andrew Desmond McCall, 39, pleaded guilty to 32 counts of obtaining and attempting to obtain a financial advantage by deception. Using false identities and forged documents, McCall created 17 bogus companies to submit false activity statements to the Tax Office. Refunds totalling $530,257 were paid with $183,820 stopped prior to payment. McCall was arrested following extensive investigation by the Tax Office and the Australian Federal Police. During searches of McCall’s business and residential addresses documents and a laptop computer were seized. Computer forensics uncovered false drivers licences, passports and birth certificates used to create false bank accounts and activity statements. Deputy Commissioner Michael Monaghan said the Tax Office has a strong focus on identity related tax fraud. “We are working with other agencies, sharing information and strengthening our processes to deter and detect serious fraud and evasion,” Mr Monaghan said. A reparation order for $502,023.03 was granted and McCall will serve a minimum of four years and three months before being eligible for parole.   New Super Calculations from 1 st July 2008 Calculate super using ordinary time earnings From 1 July 2008, you must use ordinary time earnings, as defined in the super guarantee law , to calculate super guarantee contributions for your employees. This ensures all employees are treated the same for super guarantee purposes. Ordinary time earnings are generally what employees earn for their ordinary hours of work, including: over-award payments commissions shift allowances, and paid leave. Ordinary time earnings does not include overtime. This means from 1 July 2008, you cannot use an earnings base to calculate your super guarantee contributions which is based on: an industrial award an existing employment agreement a fund’s trust deed, or a law of the Commonwealth, States or Territories. For more information on what is included or excluded from ordinary time earnings, refer to Using ordinary time earnings to calculate the super guarantee . What do you need to do? 1.        Check to see if you’re using an earnings base other than ordinary time earnings to calculate your super contributions. If the amount you pay is less than the minimum 9%, you will have to increase this amount to meet the minimum to avoid the super guarantee charge. 2.        Think about building the increased super guarantee contributions into your workplace bargaining processes and payroll system now to be ready for 1 July 2008. Start using ordinary time earnings for all your employees from 1 July 2008.