The 2022 Fringe Benefits Tax (FBT) year ends on 31 March 2022.

Lodgements and payments for FBT returns will be due 27 June 2022.

How do I know if I need to consider FBT?

Do you make vehicles available to employees for private use that are either owned or leased by your business?
Has your business forgiven any debts owed by employees?
Does your business provide loans at a reduced interest rates to employees?
Has your business paid for, or reimbursed, any private expenses incurred by employees?
Does your business provide a house or unit of accommodation to employees?
Does your business provide employees with living-away-from-home allowances?
Do any employees have a salary package (salary sacrifice) arrangement in place?
Does your business provide entertainment by way of food, drink or recreation to employees?
Has your business provided employees with goods at a lower price than they are normally sold to the public?

What to do?

In preparation for an FBT return for the year ended 31 March 2022, be sure to:
Have your motor vehicle logbook up to date (required for 3 months every 5 years)
Write down (or email us) your closing odometer readings as at 31 March 2022.

Not much is changing to the rates and thresholds for next year.

Concessional contributions cap — $27,500
Non-concessional contributions cap — $110,000
Division 293 tax income threshold — $250,000
General transfer balance cap — $1.7 million

5 June 2022
Lodge tax return for all entities with a lodgment due date of 15 May 2022 if the tax return is not required earlier

21 June 2022
Lodge and Pay May 2022 monthly business activity statement

25 June 2022
Lodge and pay 2022 Fringe Benefits Tax Annual Return for tax agents if lodging electronically.

30 June 2022
Super guarantee contributions must be paid by this date to qualify for a tax deduction in the 2020-21 Tax Return by 30 June 2022, regardless of any deferrals in place.

PERSONAL TAXATION

Personal tax rates unchanged for 2022–2023

In the Budget, the Government did not announce any personal tax rates changes. The Stage 3 tax changes commence from 1 July 2024, as previously legislated.

The 2022–2023 tax rates and income thresholds for residents are unchanged from 2021–2022:

taxable income up to $18,200 – nil;

taxable income of $18,201 to $45,000 – 19% of excess over $18,200;

taxable income of $45,001 to $120,000 – $5,092 plus 32.5% of excess over $45,000;

taxable income of $120,001 to $180,000 – $29,467 plus 37% of excess over $120,000; and

taxable income of more than $180,001 – $51,667 plus 45% of excess over $180,000.

Stage 3: from 2024–2025

The Stage 3 tax changes will commence from 1 July 2024, as previously legislated. From 1 July 2024, the 32.5% marginal tax rate will be cut to 30% for one big tax bracket between $45,000 and $200,000. This will more closely align the middle tax bracket of the personal income tax system with corporate tax rates. The 37% tax bracket will be entirely abolished at this time.

Therefore, from 1 July 2024, there will only be three personal income tax rates: 19%, 30% and 45%. From 1 July 2024, taxpayers earning between $45,000 and $200,000 will face a marginal tax rate of 30%. With these changes, around 94% of Australian taxpayers are projected to face a marginal tax rate of 30% or less.

Low income offsets: LMITO temporarily increased, LITO retained

The low and middle income tax offset (LMITO) will be increased by $420 for the 2021–2022 income year so that eligible individuals will receive a maximum LMITO benefit up to $1,500 for 2021–2022 (up from the current maximum of $1,080).

This one-off $420 cost of living tax offset will only apply to the 2021–2022 income year. Importantly, the Government did not announce an extension of the LMITO to 2022–2023. So it remains legislated to only apply until the end of the 2021–2022 income year (albeit up to $1,500 instead of $1,080). The Government said the LMITO for 2021–2022 will be paid from 1 July 2022 to more than 10 million individuals when they submit their tax returns for the 2021–2022 income year. Other than those who do not require the full offset to reduce their tax liability to zero,

all LMITO recipients will benefit from the full $420 increase. That is, the proposed one-off $420 cost of living tax offset will increase the maximum LMITO benefit in 2021–2022 to $1,500 for individuals earning between $48,001 and $90,000 (but phasing out up to $126,000). Those earning up to $48,000 will also receive the $420 one-off tax offset on top of their existing $255 LMITO benefit (phasing up for incomes between $37,001 and $48,000).

All other features of the current LMITO remain unchanged (including that it will only apply until the end of the 2021–2022 income year). Consistent with the current LMITO, taxpayers with incomes of $126,000 or more will not receive the additional $420.

As already noted, the Government has proposed that eligible taxpayers with income up to $126,000 will receive the additional one-off $420 cost of living tax offset for 2021–2022 on top of their existing LMITO benefit.

Currently, the amount of the LMITO for 2021–2022 is $255 for taxpayers with a taxable income of $37,000 or less. Between $37,000 and $48,000, the value of LMITO increases at a rate of 7.5 cents per dollar to the maximum amount of $1,080. Taxpayers with taxable incomes from $48,000 to $90,000 are eligible for the maximum LMITO of $1,080. From $90,001 to $126,000, LMITO phases out at a rate of 3 cents per dollar.

Low income tax offset (unchanged)

The low income tax offset (LITO) will also continue to apply for the 2021–2022 and 2022–2023 income years. The LITO was intended to replace the former low income and low and middle income tax offsets from 2022–2023, but the new LITO was brought forward in the 2020 Budget to apply from the 2020–2021 income year.

The maximum amount of the LITO is $700. The LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000 and then at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

COVID-19 test expenses to be deductible

The Budget papers confirm that the costs of taking COVID-19 tests – including polymerase chain reaction (PCR) tests and rapid antigen tests (RATs) – to attend a place of work are tax deductible for individuals from 1 July 2021. In making these costs tax deductible, the Government will also ensure FBT will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose.

This measure was previously announced on 8 February 2022.

BUSINESS TAXATION

Deduction boosts for small business: skills and training, digital adoption

The Government announced two support measures for small businesses (aggregated annual turnover less than $50 million) in the form of a 20% uplift of the amount deductible for expenditure incurred on external training courses and digital technology.

External training courses

An eligible business will be able to deduct an additional 20% of expenditure incurred on external training courses provided to its employees. The training course must be provided to employees in Australia or online, and delivered by entities registered in Australia.

Some exclusions will apply, such as for in-house or on-the-job training.

The boost will apply to eligible expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2024.

The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.

Digital adoption

An eligible business will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support its digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.

An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.

The boost will apply to eligible expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023.

The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.

TAX COMPLIANCE AND INTEGRITY

Taxable payments data reporting: option to link to BAS cycle

The Budget confirms the Treasurer’s earlier announcement that businesses will be provided with the option to report taxable payments reporting system data on the same lodgment cycle as their activity statements, via accounting software. The rules for the taxable payments reporting system are contained in Subdiv 396-B of Sch 1 to the Taxation Administration Act 1953.

The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the policy scope, design and specifications of the measure. Subject to advice from software providers about their capacity to deliver, it is anticipated that systems will be in place by 31 December 2023, with the measure to commence on 1 January 2024.

SUPERANNUATION

Super guarantee: rate rise unchanged

The Budget did not announce any change to the timing of the next super guarantee (SG) rate increase. The SG rate is currently legislated to increase from 10% to 10.5% from 1 July 2022, and by 0.5% per year from 1 July 2023 until it reaches 12% from 1 July 2025.

With the SG rate set to increase to 10.5% for 2022–2023 (up from 10%), employers need to be mindful that they cannot use an employee’s salary-sacrificed contributions to reduce the employer’s extra 0.5% of super guarantee. The ordinary time earnings (OTE) base for super guarantee purposes now specifically includes any sacrificed OTE amounts. This means that contributions made on behalf of an employee under a salary sacrifice arrangement (defined in s 15A of the Superannuation Guarantee (Administration) Act 1992) are not treated as employer contributions which reduce an employer’s charge percentage.

Super Guarantee opt-out for high-income earners

The increase in the SG rate to 10.5% from 1 July 2022 also means that the SG opt-out income threshold will decrease to $261,904 from 1 July 2022 (down from $275,000). High-income earners with multiple employers can opt-out of the SG regime in respect of an employer to avoid unintentionally breaching the concessional contributions cap ($27,500 for 2021–2022 and 2022–2023). Therefore, the SG opt-out threshold from 1 July 2022 will be $261,904 ($27,500 divided by 0.105).

Superannuation pension drawdowns

The temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to 30 June 2023. The 50% reduction in the minimum pension drawdowns, which has applied for the 2019–2020, 2020–2021 and 2021–2022 income years, was due to end on 30 June 2022

A director identification number (director ID) is a unique identifier you need to apply for once and will keep forever. It will help prevent the use of false or fraudulent director identities. It is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity with the Australian Government.

Who Needs to Apply and When

You will need a director ID:

by 30 November 2022 for existing directors;

within 28 days if you become a director between 1 November 2021 and 4 April 2022; or

prior to being appointed if you become a director from 5 April 2022 onwards.

Why You Need A Director ID?

All directors are required by law to verify their identity with the Australian Government before receiving a director ID. This is important because it will help to:

prevent the use of false or fraudulent director identities;

make it easier for external administrators and regulators to trace directors’ relationships with companies over time; and

identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.

Applying Online

Directors eligible for a myGovID are able to apply online via the ABRS website.

The application process requires the following other information as proof of identity:

residential address (as recorded by the Australian Taxation Office (ATO))

specific information as proof of identify from two of the following list:

– bank account details,

– an ATO notice of assessment,

– superannuation account details,

– a dividend statement,

– a PAYG payment summary.

Applying Over The Phone

In order to apply over the phone, Directors will need to provide the same information as is required to apply online (with the exception of a myGovID), as well as certain other additional information as proof of identity including details from either a Medicare card or an Australian driver’s licence.

Paper Applications

If Directors are unable to supply the identity documents required to apply using other methods, they will need to apply in paper form attaching certified copies of certain additional proofs of identity.

Details of which documents are required to support paper applications from Directors applying from within Australia and Directors applying from overseas can be found on the ABRS website.