Newsletter December 2022

30 November 2022

Christmas celebrations and FBT implications

With summer and Christmas celebrations just around the corner, you may plan a party or a day on the green with your employees. Before you fire up the BBQ, consider your celebration’s fringe benefits tax (FBT) implications.

Fringe Benefits Tax (FBT) applies when an employer provides benefits to an employee other than their regular salary or wage. The circumstances that determine an FBT event include:

the amount you spend on each employee
when and where your party is held
who attends – is it just employees, partners, clients, or suppliers also invited?
the value and type of gifts you provide.

Don’t forget to keep all records relating to the entertainment-related fringe benefits you provide, including how you worked out the taxable value of benefits.

Christmas party held on the business premises

The below tables contain general information on the different types of Christmas parties that may be held and the FBT implications for such parties.

Your business decides to have a party on its premises on a working day before Christmas, and you provide food, beer and wine. The implications would be as follows:

If…When…Current employees only attend For employees – there is no FBT implication as it is an exempt property benefit. There is no tax deduction and no GST claimable.Current employees and their families attend at the cost of less than $300 per head (GST inclusive)For employees and family – there will be no FBT implications as the benefit is considered minor and infrequent. There is no tax deduction and no GST claimable.Current employees, their families and clients attend at the cost of $300 or more per head (GST inclusive)For employees – there are no FBT implications as it is an exempt property benefit. There is no tax deduction and no GST claimable.

For a family – a taxable fringe benefit arises where the value is $300 per person or more.

For clients – considered entertainment, however, no FBT implications but no income tax deduction either and no GST claimable.

Christmas party held off the business premises

You decide to hold your Christmas function at a restaurant on a working day before Christmas and provide meals, drinks and entertainment. The implications would be as follows:

If…Then…Current employees only attend at the cost of less than $300 per head (GST inclusive)There will be no FBT implications as the benefit is considered minor and infrequent. There is no tax deduction and no GST claimable.Current employees and their families and clients attend at the cost of less than $300 per head (GST inclusive)For employees – there will be no FBT implications as the benefit is considered minor and infrequent. There is no tax deduction and no GST claimable.

For a family – there will be no FBT implications as the benefit is considered minor and infrequent. There is no tax deduction and no GST claimable.

For clients – considered entertainment, no FBT implications, no income tax deduction, and no GST claimable.

Current employees, their families and clients attend at the cost of $300 or more per head (GST inclusive)For employees – a taxable fringe benefit arises where the value is $300 per person or more. A tax deduction and GST credit can be claimed.

For a family – a taxable fringe benefit arises where the value is $300 per person or more. A tax deduction and GST credit can be claimed.

For clients – considered entertainment, however, no FBT implications but no income tax deduction either and no GST claimable

Christmas gifts

The following table briefly summarises the general FBT (and other tax) consequences for an employer providing Christmas gifts based on the ATO’s guidelines.

Type of giftGifts to employees and their familyGifts to non-employees (clients, suppliers, contractors, etc.)Non-entertainment gifts.

For example:

■ Christmas hamper

■ Bottle of wine or whisky

■ Gift voucher

■ Bottle of perfume

■ Flowers

■ Pen set

Subject to FBT (unless exempt – e.g., the minor benefits exemption applies) and income tax deductible*. To be an exempt minor benefit, the total cost of a gift must be less than $300 (GST inclusive) and provided infrequently. If the gift is FBT exempt, no income tax deduction and no GST credit can be claimed.No FBT applies.

An income tax deduction is allowed.*

GST input tax credits can generally be claimed.

Entertainment gifts.

For example:

■ Theatre/movie tickets

■ Tickets to a sporting event

■ Holiday Accommodation

Subject to FBT (unless exempt – e.g., the minor benefits exemption applies) and income tax deductible*. The total cost of a gift must be less than $300 (GST inclusive) and provided infrequently to be an exempt benefit. If the gift is FBT exempt, no income tax deduction and no GST credit can be claimed.Not subject to FBT.

No income tax deduction can be claimed.

GST input tax credits cannot be claimed.

* No deduction is allowed for any GST input tax credit entitlement

Key takeaways

In summary, the key here is to know your limits keeping in mind that the $300 “minor and infrequent” benefit threshold for FBT is the key to your Christmas party and gifts remaining tax-free. Note that the $300 threshold applies to each benefit provided, not to the total value of the associated benefit. Where does taxi travel stand in all of this? Any benefit arising from taxi travel by an employee is exempt if the travel is a single trip beginning or ending at the employee’s place of work.

How to protect yourself online

Throughout October, the Australian Cyber Security Centre (ACSC) is sharing guides and resources that will help you protect all your information from cyber criminals.

Update your devices and applications

Cybercriminals hack devices by using known weaknesses in systems or apps. Check your devices for updates, and turn on automatic updates so that future updates are made immediately when charging and in Wi-Fi.

Turn on multi-factor authentication

Multi-factor authentication (MFA) is a security measure that requires at least 2 proofs of identity to grant access. MFA options can include a physical token, random pin or fingerprint. Using MFA significantly boosts your protection against criminals. While they might steal one proof of identity, like your password, they will be locked out of your account without the other.

Set up backups

Backing up your data means saving copies of your files to an external storage device or an online server like the cloud. It means you can restore your important information if something goes wrong. Setting up automatic backups in your system or application settings will give you peace of mind.

Why you must lodge on time

If your entity is more than 12 weeks late in lodging BAS, you automatically become subject to a Directors Penalty Notice (DPN). If the business cannot pay its debts, you may become personally liable for your entity’s unpaid PAYG withholding, GST, and Superannuation.

Also, the Government will increase the amount of the Commonwealth penalty unit from $222 to $275 from 1 January 2023. The increase will apply to offences committed after the relevant legislative amendment comes into force. The amount will continue to be indexed every 3 years in line with the CPI as per the pre-existing schedule, with the next indexation occurring on 1 July 2023.

Penalty units describe the amount payable for fines under Commonwealth laws, including in relation to communication, financial, tax and fraud offences. Fines are calculated by multiplying the value of one penalty unit by the number of penalty units prescribed for the offence. This measure ensures that financial penalties for Commonwealth offences continue to remain effective in deterring unlawful behaviour and contribute to budget repair.

Estimates for the value of goods taken from trading stock for private use

Taxation Determination TD 2022/15, published on 19.10.2022, provides an update of amounts the Commissioner will accept as estimates of the value of goods taken from trading stock for private use by taxpayers in named industries. The updated amounts are contained in the schedule for the value of goods taken from trading stock (the schedule) in paragraph 2 of this Determination. The schedule for the value of goods taken from trading stock for private use in the 2022-23 income year is as follows:

Type of businessAmount (excluding GST) for adult/child over 16 yearsAmount (excluding GST) for children 4 to 16 years oldBakery$1,360$680Butcher$990$495Restaurant/café (licensed)$4,830$1,950Restaurant/café (unlicensed)$3,900$1,950Caterer$4,120$2,060Delicatessen$3,900$1,950Fruiterer/greengrocer$1,010$505Takeaway food shop$4,030$2,015Mixed business (includes milk bar, general store and convenience store)$4,870$2,435

Motor vehicle expenses for a home-based business

Generally, a taxpayer cannot claim a tax deduction for travel for continuing from commuting from home to their place of work. However, if you’re operating a home-based business, you can claim the cost of trips between your home and other places if the travel is for business purposes. For example, you could claim the cost of travel to:

a client’s premises, if you’re working there or delivering some documents
purchase equipment or supplies
the bank to do your banking
the post office to mail out invoices or get mail from a PO Box
see your business tax agent or BAS agent.

Depending on your business structure, you can use different methods to calculate motor vehicle expenses.

Superannuation over summer

The holiday season is fast approaching, and your holiday casuals may now be eligible for super.

From 1 July 2022, you need to pay super for employees at a rate of 10.5%, regardless of how much you pay them. This is because the $450-per-month threshold for super guarantee (SG) eligibility has been removed.

Take Jane, for instance. She is a 22-year-old employee working a short-term job at a restaurant over the holiday season, and she works 23 hours a month, earning $430 before tax.

In the past, holiday employees such as Jane would not be paid super as they earned below the $450 threshold. Now, Jane will be eligible for super pay on her ordinary time earnings at 10.5%.

This change doesn’t affect other eligibility requirements for SG. Workers who are under 18 still need to work more than 30 hours a week to be eligible.

For example, Anish is a 17-year-old employee working at a hotel over the holiday season. Anish works 32 hours weekly at the hotel and earns $800 before tax. He also works 5 hours at his local café, earning $150. As Anish worked more than 30 hours in one week at the hotel, his employer must pay him super on the $800 earned. As Anish works less than 30 hours a week at the café, he is not entitled to super from this employer. Likewise, Anish isn’t entitled to super for any weeks he works less than 30 hours at the hotel.

Check your payroll and accounting systems are up to date, so you are correctly calculating your employees’ SG payments.

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Practice Update September 2025

2 September 2025

Land tax in Australia: exemptions, tips and lessons Land tax is one of those quiet state-based taxes that does not grab headlines like income tax or GST, but impacts property owners once thresholds are crossed. It applies when the unimproved value of land exceeds a certain amount, which differs from state to state. Principal places of residence are usually exempt, but investment properties, commercial holdings, and certain rural blocks may be subject to taxation. For individuals and small businesses, land tax is worth paying attention to because exemptions can make the difference between a manageable annual bill and a nasty surprise. A recent case in New South Wales (Zonadi case ) has sharpened the focus on when land used for cultivation qualifies for the primary production exemption. The lessons are timely for farmers, winegrowers and anyone with mixed-use rural land. The basics of land tax Each state and territory (except the Northern Territory) imposes land tax. Key features include: Assessment date : Usually determined at midnight on 31 December of the preceding year (for example, the 2026 assessment is based on ownership and use as at 31 December 2025). Thresholds : Vary across jurisdictions. For example, in 2025, the NSW threshold is $1,075,000, while in Victoria it is $300,000. Exemptions : Principal place of residence, primary production land, land owned by charities and specific concessional categories. Rates : Progressive, with higher landholdings paying higher rates. Unlike council rates, which fund local services, land tax is a revenue measure for states. It is payable annually and calculated on the total taxable value of landholdings. Primary production exemption Most states exempt land used for primary production from land tax. The policy aim is precise: farmers should not be burdened with land tax when using their land to produce food, fibre or similar goods. However, the details of what constitutes primary production vary. Qualifying uses generally include: cultivation (growing crops or horticulture) maintaining animals (grazing, dairying, poultry, etc.) commercial fishing and aquaculture beekeeping Sounds straightforward, but the catch is in how the land is used and for what purpose. Lessons from the Zonadi case The Zonadi case involved an 11-hectare vineyard in the Hunter Valley. The land was used for: 4.2ha of vines producing wine grapes a cellar door and wine storage area a residence and tourist accommodation some trees, paddocks and access ways During five land tax years in dispute, the taxpayer sold some grapes directly but used most of the crop to make wine off-site, which was then sold through the cellar door. Income was derived from grape sales, wine sales and tourist accommodation. The NSW Tribunal had to decide whether the land’s dominant use was cultivation for the purpose of selling the produce of that cultivation (a requirement under section 10AA of the NSW Land Tax Management Act). The outcome was a blow for the taxpayer. The Tribunal said: Growing grapes was indeed a form of cultivation and amounted to primary production. But cultivation for the purpose of making wine did not qualify, because the exemption only applies where the produce is sold in its natural state. Wine is a converted product, not the product of cultivation. Although some grapes were sold directly, the bulk of the financial gain came from wine sales. Therefore, the dominant use of the land was cultivation to make and sell wine, which is not exempt. The exemption was denied, and the taxpayer was left with a land tax bill. Why this matters For small businesses, especially those that combine farming with value-adding activities such as processing or tourism, the case serves as a warning. The line between primary production and secondary production can determine whether a land tax exemption applies. If most income comes from a cellar door, farmstay, or product manufacturing, the exemption may be at risk, even though cultivation is occurring on the land. Different rules in Victoria Victoria takes a broader view. It defines primary production to include cultivation for the purpose of selling the produce in a natural, processed or converted state. In other words, grapes sold for wine production would still be considered primary production. The only further hurdle is the “use test”, which depends on location: outside Greater Melbourne: land must be used primarily for primary production within urban zones: land must be used solely or mainly for the business of primary production Had Zonadi been in Victoria, the outcome could have been very different. The vineyard would likely have been exempt from this requirement. State-based comparisons Here’s a snapshot of how land tax treatment differs across states when it comes to cultivation and primary production:

Practice Update July 2025

10 July 2025

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Practice Update June 2025

10 July 2025

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