Tax Tips for Businesses

Cheaper Fuel Costs from 1 July 2008

The ever increasing fuel prices are having a significant effect on the profit of your business. You should be getting every advantage from the Tax Office you are entitled to including fuel tax credits.

Financial Dynamics Client Manager, Darren Wearne predicts many more people in business will be eligible for the fuel tax credits even if they were not previously, and those businesses previously entitled may now be able to claim a greater amount. This is due to the expansion by the ATO of the fuel tax credits programme from 1 July 2008.

Fuel tax credits provide you with a credit for the fuel tax included in the price of fuel you use in business activities. Some examples of business equipment include:

• Trucks with a GVM (Gross Vehicle Mass) of over 4.5 tonne, bulldozers, bobcats, backhoes,cranes, front-end loaders, graders etc
• All-terrain bikes and motorcycles (off-road use), outboard motors etc
• Cement mixers, chainsaws, generators, pumps etc
• Lawnmowers, whipper-snippers, blower vacuums etc

The amount you can claim depends on how you use the fuel in your business. You can claim:

• 18.51 cents per litre for fuels eligible from 1 July 2006 that you use in vehicles with a GVM of greater than 4.5 tonne travelling on public roads. (Please note, if you use a heavy diesel vehicle on a public road and your vehicle was manufactured before 1 January 1996, you must meet an environmental criterion to claim fuel tax credits).
• 38.143 cents per litre for fuels eligible from 1 July 2006 that you use in specified activities – for example, in agriculture, forestry, fishing, mining, marine and rail transport, electricity generation . Other fuels (including petrol) you use in these activities are eligible from 1 July 2008.
• 19.0715 cents per litre for fuels acquired from 1 July 2008 to use in other activities, machinery, plant and equipment. Examples include a wide range of construction, wholesale/retail, property management and landscaping activities. The only exception is fuel used in light vehicles of 4.5 tonne GVM or less travelling on public roads.

To find out if you are eligible and how to register, please contact a Client Manager at Financial Dynamics on 442 12345 for further information.

Related Links

Click here to obtain information from the ACCC (Australian Competition & Consumer Commission) on petrol price cycles in order to help you determine the best time to purchase fuel. 

Fringe Benefits Tax v Christmas Parties and Gifts

"Make Santa Tax Free" says Angela Barbay of Financial Dynamics.

"Now that Christmas is nearly upon us, you are more than likely wondering if you can claim a tax deduction, GST input tax credit or if you have to pay Fringe Benefits Tax (FBT) on the Christmas gifts and parties you provide to your employees. The answers to all these questions are contained below;"

1. Gifts valued at less than $300

An employer who provides staff with a gift, such as a bottle of wine or whisky, a voucher to a department store or a Christmas hamper (ie: non-entertainment gifts) that is valued at less than $300 GST inclusive will be exempt from FBT, can claim the GST credit and also claim a tax deduction for the net amount.

Entertainment gifts such as tickets to sporting events or to the theatre will not be as tax effective, because the employer will not be entitled to claim the GST credit or tax deduction for the cost. They will be exempt from FBT if the GST inclusive value is less than $300.

The trap is the FBT exemption will only apply if it is not a frequent or regular benefit. A Christmas gift is not considered a frequent or regular occurrence.

2. Christmas parties held on business premises

An employer will not be subject to FBT in relation to a Christmas party held on the employer’s business premises, provided only current employees attend and it is held on a working day. This FBT exemption has no dollar limit, and only applies to the cost of employees attending the Christmas party. The cost of spouses attending will be FBT exempt providingtheir cost per head is less than $300.

The employer will not be able to claim the GST credit or a tax deduction for the cost of the Christmas party held on their business premises.

3. Christmas parties costing less than $300 held off premises

An employer will not be subject to FBT if the cost of an off premises Christmas party per employee is less than $300 GST inclusive. Any associated gifts are considered separately and are exempt from FBT providing they are also less than $300 in value.

If partners attend, the employer will not be subject to FBT where the cost of the employee and their partner attending is less than $300 each.

Employers must include the cost of taxi travel, bus travel or other transport costs of employees attending the Christmas party when calculating the $300 FBT exemption limit.

The employer will not be able to claim the GST credit or a tax deduction for the cost of the Christmas party held off business premises.

What to do now?

Angela is happy to field questions from clients who want to save money whilst complying with their tax obligations.

If you need any further assistance please contact Angela at Financial Dynamics at angelab@financialdynamics.com.au.

Tel: 02 4421 2345Fax: 02 4421 2340