5 Steps To A Tax Free Christmas

1. Spontaneous, Well Thought Through Team Gifts

The key to Christmas presents for your team is to keep the gift spontaneous, ad hoc, and from a tax perspective, below $300 per person. $300 is the minor benefit threshold for Fringe Benefits Tax (FBT) so anything at or above this level will mean that your Christmas generosity will result in a gift to the Tax Office as well at a rate of 47%. To qualify as a minor benefit, the gifts also have to be ad hoc - no once a month gym membership payments or giving the one person multiple gift vouchers amounting to $300 or more.

2. The Work Christmas Party Options

If you really want to avoid tax on your work Christmas party then host it in the office on a work day. This way, FBT is unlikely to apply regardless of how much you spend per person. Also, taxi travel that starts or finishes at an employee's place of work is also exempt from FBT. So, if you have a few team members that need to be loaded into a taxi after over indulging in Christmas cheer, the ride home is exempt form FBT.

If your work Christmas party is out of the office, keep the cost of your celebrations below $300 per person. This way, you won't pay FBT because anything below $300 per person is a minor benefit and exempt. Be careful though as the $300 includes all the costs of the event so meals, drinks, entertainment, etc.

If the party is not held on your business premises then the taxi travel is taken to be a separate benefit from the party itself and any Christmas gifts you have provided. In theory, this means that if the cost of each item per person is below $300 then the gift, party and taxi travel can all be FBT free. However, the total cost of all benefits provided to the employees needs to be taken into account in determining whether the benefits are minor.

If your business hosts slightly more extravagant parties and goes above the $300 per person minor benefit limit, you will pay FBT but you can also claim a tax deduction for the cost of the event.

3. Give A Gift Rather Than Doing Lunch

Few of us have that much time in the diary for lots of Christmas lunches so why not give a gift instead? In addition to a few extra hours saved and a lot less calories to work off, there is also a tax benefit. As long as the gift you give to the client is given for relationship building with the expectation that the client will bestow your business with more work (that is, there is a link between the gift and revenue generation), then the gift is tax deductible.

Entertaining your clients at Christmas is not tax deductible. So, if you take them out to a nice restaurant, to a show, or any other form of entertainment, then you can't claim it as a deductible business expense and you can't claim the GST credits either. It's goodwill to all men but not much more.

4. Give A Charity A Cash Donation

Charities love cash. They don't have to spend any of their precious resources to receive it – unlike a lot of charity dinners, auctions, and promotional campaigns. And, from a tax perspective, it's the safest way to ensure that you or your business can claim a deduction for the full amount of the donation.

There are a few rules to giving to charities that make the difference between whether you will or won't receive a tax deduction. 

  • The charity must be a deductible gift recipient (DGR). You can find the list of DGRs on the Australian Business Register.
  • If you buy any form of merchandise for the 'donation' – biscuits, teddies, balls or you buy something at an auction – then it's generally not deductible. Your donation needs to be a gift, not an exchange for something material. Buying a goat or funding a child's education in the third world is generally ok because you are generally donating an amount equivalent to the cause rather than directly funding that thing.
  • The tax deduction for charitable giving over $2 goes to the person or entity whose name is on the receipt.

5. Christmas Bonuses

If you are planning to provide your team with a cash bonus rather than a gift voucher or other item of property then remember that this will be taxed in much the same way as salary and wages. A PAYG withholding obligation will be triggered and the ATO's view is that the bonus will also be treated as ordinary time earnings which means that it will be subject to the superannuation guarantee provisions.

Quote Of The Month

"What I don't like about office Christmas parties is looking for a job the next day."
Phyllis Diller 

Source: Knowledge Shop

Boosting Workplace Productivity

Putting a serious effort into boosting the productivity of your company will ensure that your business is working as efficiently as possible.

The improvements that can be made from a few well thought out productivity-boosting changes can be impressive. Understanding the root causes of your productivity drags is important, and every company will have individual issues.

The benefits of enhancing workplace productivity are numerous and do not just advantage management, but also employees. Not only does your business benefit from higher output and efficiency, but staff morale is heightened due to job role satisfaction and improved workplace culture. Research shows that utilising your staff to their maximum potential improves their job satisfaction and enhances motivation levels.

Some factors that impact workplace output are staff motivation and attitudes, inefficient management and procedures, lack of employee engagement, and workplace organisation. Studies have shown that businesses with a positive workplace culture and strong leadership are more lucrative and productive than their counterparts. The common misconception is that working your employees harder is the key to improving productivity within the workplace.

However, increasing workplace productivity is all about making things work more efficiently as a whole to achieve a higher output. Improving productivity does not mean you have to undertake drastic changes or massive restructuring in your workplace. The following tips will help ensure that you keep it a priority to ensure the continued success of your business.

Set Goals For Employees And Communicate Expectations

It is pointless to expect a productive workplace if employee expectations are not clear. It is imperative that you communicate both the organisation's and individual employee goals clearly and openly so that there is no confusion about job roles or company direction. Employee performance goals are more effective when set in measurable terms. This can be any goal with a quantitative value, e.g, sale targets, time dependent or deadline driven, rating systems, or numerical based.

Open Communication Channels

Communication is a key component to increasing workplace productivity. Liaising with each department and individual within the company on a regular basis will help ensure that everyone stays motivated and on track. Meeting with managers, supervisors, and other employees frequently to discuss team and individual performances, motivations, and other work-related issues will benefit everybody in the organisation.

Invest In Staff Development

Your employees are the most valuable aspect of your business, therefore it is essential to the success of your company that you invest in them. Training and development not only adds to your organisation, but it motivates your employees with continued growth and individual development. Providing continued workplace training is also proven to enhance employee retention rates.

Reward Achievements

Rewarding an employee's achievements and contributions in the workplace plays an integral part in increasing productivity. When your employees feel appreciated, they will be more motivated and in turn increase their work performance. Whether it is a monetary or non-monetary reward, any recognition of your employees' merits will be instrumental in improving productivity. 

Improving Your In-House Communication

Your staff are the most important asset that your company has, and it is imperative to treat them as such. Investing in training your staff and expanding their skillsets can make huge improvements to your business.

Laying The Right Foundations

Clearly, the minimum you need to offer staff is the training that will allow them to perform their roles. For example, your administration team will need essential computer skills, and your sales team will need a good understanding of your products and services. There are also certain mandatory requirements, such as health and safety training. But beyond these basics, there are benefits to offering non-essential, or 'added value' training to your staff.

A clear advantage to offering ongoing training is that it can give you a competitive edge. For instance, salespeople who have received ongoing training to enhance their verbal communication, phone manner, writing skills and negotiation approach will be at an advantage over those who are only given product training and a script.

Who Should Receive What Training?

When deciding on the particular training to offer staff, the key is to identify any skill gaps and also skill shortages. Essentially, you can do this by defining what you want your business to achieve, identifying the skills and knowledge required to do so, and then examining where existing staff fall short of the required expertise. You can do this in a management brainstorming session. There are also a number of online-based skill assessment tools now available at very low cost.

There is also an argument that investing in widespread training can be beneficial for its own sake, turning your business into a learning oriented organisation, where staff are constantly learning new skills across a range of disciplines and applying these to the business.

How Much To Invest

How much you spend will depend on the type of training you want to offer. Typically, businesses with less than 100 staff spend an average of less than $600 per employee on training every year. Whilst this may sound like a lot of money, particularly for a small business, it is important to keep in mind that training is one of the most significant factors in retaining staff. Even a modest investment in training may go a long way in increasing employee longevity and reducing the costs of recruiting new staff.

But perhaps the best approach is not to view training as a cost, but a business investment that will positively contribute to your bottom line. 

Top 15 Harris Black Christmas Carols

With Christmas only a few weeks away, we thought we would supply you with Harris Black's Top 15 Christmas Carols. 

  1. One Little Christmas Tree – John Farnham
  2. Maybe This Christmas – Katie Noonan 
  3. How to Make Gravy – Paul Kelly 
  4. Good King Wenceslas – John Mason Neale 
  5. Last Christmas – Wham 
  6. Feliz Navidad – Michael Buble
  7. Little Drummer Boy - Pentatonix 
  8. All I want for Christmas is You – Mariah Carey 
  9. Santa Clause is Coming to Town – Michael Buble 
  10. White Christmas – Bing Cosby
  11. Merry Christmas Baby – Bruce Springsteen 
  12. Jingle Bell Rock 
  13. Winter Wonderland 
  14. Silent Night 
  15. The 12 Days of Christmas

Enjoy the festive season. 


Entering The World Of Social Media

Everyone knows how important it is for businesses to develop an engaging social media presence.

However, getting started on social media can be extremely daunting and if you don't have a well thought out strategy it can be a waste of time.

With a few easy steps you can launch your organisation's social media sites to make the most of potential opportunities for your business. While some businesses have entire departments and teams dedicated to business networking, you can start off small and still reap the rewards that this marketing platform has to offer. Here are some key steps to set you on your way. 

1. What Are Your Needs?

One of the most important things to consider before you put your business in the social media realm, is why do you need to do this? If you are simply doing it for the sake of it, and have no fundamental needs then you need to reconsider. 

2. What Are Your Goals?

You need to make your needs specific. What is your ultimate goal? What products do you want to improve? What aspect of your business do you want to improve?

3. Who Is Your Target Audience?

The digital world is a huge one so you need to be specific on whom your audience is so you can target them effectively.

4. Which Sites?

You need to decide which sites you want to make your business present on. Do some research on the site, so you know exactly what you are dealing with.

5. Whose Responsibility Will Your Sites Be?

Make sure there is someone to manage your pages/accounts so that they are not abandoned. Social media is fast paced so in order to retain your customers' attention your sites need to be active and regularly updated.

Getting Your Super Payments Right

As an employer, you are required to make ongoing superannuation guarantee (SG) contributions on behalf of your employees.

These SG contributions are calculated at 9.5% of the employee's real time earnings and must be paid quarterly into that employee's nominated super fund.

There are several ways in which employers can become non-compliant in their superannuation obligations. If SG contributions are insufficient, not paid at all, paid late or paid into the wrong fund an employer may face penalties.

Some employers also avoid their superannuation responsibilities by paying employees in cash or incorrectly treating them as contractors.

Not meeting your superannuation responsibilities can be a costly mistake for employers. Ordinarily, SG contributions can be deducted from the business's taxable income. However, if you pay your SG contributions late you will most likely lose this opportunity. Instead, you will have to pay a super guarantee charge (SGC) to the ATO. The SGC is non-tax deductible attracts interest of 10% a year and includes a $20 administration fee for each employee affected.

Unpaid superannuation used to be the responsibility of the ATO. However, this has now been passed onto the Fair Work Ombudsman. In most cases, the Fair Work inspectors will try to work with employers to correct mistakes. However, in cases where it is considered that there has been a deliberate disregard of regulations there can also be fines issued.
Individual employers can be fined up to $6600 and corporations up to $33 000. It is also worth noting that company directors are responsible for ensuring that the company pays the SG charge by the due date, and can become personally liable for the full amount if they fail to do so.

Additionally, if an employer makes a false or misleading statement on a superannuation guarantee charge statement they can be charged a painful 75% interest on the SGC amount.

Some employers may also become unintentionally non-compliant in paying their employees' SG contributions by miscalculating their income. If your business has complex or constantly changing remuneration packages, you should take extra care to ensure that your SG contributions are correct.

If you have fallen behind on your superannuation payments then you will need to lodge a Superannuation guarantee charge statement with the ATO. In some cases, if you have made a late payment to the superannuation fund you will be able to use this to offset some of the superannuation guarantee charge.

Employee Share Scheme Reform On The Way

The Government is reforming the taxation of employee share schemes to bolster entrepreneurship in Australia and support innovative start-up companies. It said the changes to the tax treatment of employee share schemes that were introduced by the former Government in 2009 have effectively brought to a halt the use of such schemes for start-up companies in Australia.

The Government said it would unwind those 2009 changes, beginning with reversing the changes made to the taxing point for options, to ensure that employees may opt to have "discounted" options taxed when they are exercised (ie converted to shares), rather than upon acquisition by the employee. This change would apply to employees of all companies.

The Government also announced that it will allow employee share scheme options or shares that are provided to employees at a small discount by eligible start-up companies not to be subject to upfront taxation, provided that the shares or options are held by the employees for at least three years.

Options issued to employees by eligible start-up companies under certain conditions will have the employee's taxation events deferred until the sale of the shares. In addition, shares issued to employees by eligible start-up companies at a small discount will have those discounts exempted from tax for the employees.

The Government will also extend the maximum time for tax deferral on discounted options and shares issued to employees by eligible start-up companies from the current seven-year period by a further eight years – that is, a 15-year deferral period.

The Treasurer is expected to consult widely on the draft legislation. The legislation is proposed to come into effect from 1 July 2015. 

Couple Refused Small Business Tax Concession

The AAT has recently affirmed a decision of the Tax Commissioner refusing a couple's request to apply a capital gains tax concession in relation to the sale of their business.

The husband and wife were the sole shareholders and directors of a private healthcare company which they had sold, via their shareholding, for some $14 million in the 2007 income year. They claimed they were entitled to the tax concession in respect of the capital gain they made on the sale of their shares. In particular, they claimed they satisfied that relevant asset test to be eligible for the concession on the basis that the company had a liability just before the sale to pay them eligible termination payments totalling some $2.75 million.

In rejection of the couple's argument, the AAT confirmed that the eligible termination payments paid to the couple were not to be taken into account for the purposes of the relevant asset test in determining whether they qualified for the small business CGT concession. The couple have appealed to the Federal Court against the decision. 

Project DO IT Nearing End, Taxman Focus On Non-Disclosure

The ATO has responded to fears expressed by some taxpayers that disclosing previously undeclared offshore income and assets could set them up for future tax investigations. The ATO has reassured taxpayers that disclosing under Project DO IT will not give them a "red flag". ATO Deputy Commissioner Michael Cranston said the ATO was far more concerned with taxpayers who don't disclose than those who do.

TIP: Project DO IT provides individuals with a last chance opportunity to declare their overseas assets and income to the ATO if they have not done so previously to avoid steep penalties and the risk of criminal prosecution for tax avoidance. As at 6 November 2014, some 1,000 individuals have made disclosures worth more than $190 million in income and over $1.1 billion in assets. The last day to come forward under Project DO IT is 19 December 2014. 

Tax Win For Retirement Village Operators

The ATO has issued a statement in response to a decision of the Administrative Appeals Tribunal (AAT) which ruled that a taxpayer that owns and manages a number of retirement villages was entitled to a deduction for payments it was contractually required to make to "outgoing residents". The AAT concluded that such payments were properly characterised as an ordinary part of carrying on the business, and were not capital or of a capital nature and therefore deductible under the tax law.

TIP: The ATO said it will amend Taxation Ruling TR 2002/14 to reflect the Tribunal's decision. It said the amendment will confirm that, where a retirement village operator makes a payment to an outgoing resident (or to their legal personal representative) that represents a share of any increase in the entry price payable by a new resident (ie the difference between the initial entry price paid by the outgoing resident and the entry price payable by the new resident), such payments will be deductible. In the meantime, the ATO said taxpayers may request that the Commissioner amend an assessment.

Crowd Funding Could Have GST Implications, Says ATO

The ATO has released information on its views on the GST treatment of crowd funding. Crowd funding involves using the internet and social media to raise funds for specific projects or particular business ventures. Typically the promoter of the project or venture will engage an intermediary to operate an online platform that allows the promoter to connect to potential funders. Various models are used to attract funding.
For example, in a "donation-based" model, where funders receive nothing apart from having their contribution to a project or business venture acknowledged by the promoter, the promoter will have no GST liability. However, the intermediary will be treated to have made a taxable supply of services to the promoter that is subject to GST. But in this case, the promoter will be entitled to a GST credit for the services he or she acquires from the intermediary. 

Office Closure

Please note our office will be closed from 11am Tuesday 23 December 2014 and re-open for business at 8:30am Monday 5 January 2015.

We wish you a safe and happy Christmas and a prosperous New Year.

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Since 1994, Harris Black has been providing accounting and advisory services to our valued clients to help them achieve their business and personal wealth goals.


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