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Offering employees non-cash benefits

Most small business owners would love to be able to offer their more valuable employees a pay rise.

Increasing an employee’s pay is likely to reduce staff turnover, increase job satisfaction and boost productivity by raising motivation and commitment.

Unfortunately, most small business owners are simply not in a position to offer their staff a larger pay packet. However, there are a number of non-cash benefits that you may care to consider as an alternative course of action for recognising and rewarding good work.

These non-cash benefits may not have a dollar value. For example, allowing employees to work from home once a week or rearranging their working hours to better suit other commitments. Non-cash benefits may also have an identifiable dollar value, and in this case employers need to be aware of fringe benefits tax (FBT) before they decide to offer a non-cash benefit.

Non-cash benefits that attract FBT include, but are not limited to, personal use of a company car, cheap or interest-free loans, and entertainment in the form of food and drinks. Typically, where an employee is provided with a fringe benefit, the cost of the benefit is deducted from their gross (before tax) pay and the employer must pay FBT on this amount.

Most employers will pass this tax cost onto the employee. In most cases, FBT will not apply to benefits that are provided to independent contractors.

There are also some types of benefits that are not subject to FBT or receive an FBT concession, including some types of work-related items, living away from home allowances, and benefits that are classified as ‘minor benefits’ (less than $300).

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What Are The Consequences Of Improperly Lodged Tax Returns?

May 4, 2021

With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce.

Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess.

As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to a tax law.

The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which are as follows:

If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:

To ensure that the statements, returns and lodgements are done correctly, and avoid the risk of potential penalties, contact us today. We’re here to help.