Tax News & Updates – March 2016

March 30, 2016

The new FBT year is upon us and will bring some changes to the way employers and employees will deal with FBT.

Those employers and employees that have Living Away From Home Allowance (LAFHA) arrangements should consider Taxation Determination TD 2016/4 in which the Commissioner sets out the guidelines for reasonable food and drink expenditure in Australian and overseas.

Also keep in mind that LAFHA laws have changed significantly over the last few years and we strongly recommend consulting your tax advisor prior to entering such an arrangement.

In other news, ATO has released draft guidelines on the Small Business Restructure Roll-over (SBRR). SBRR was announced in last year’s federal budget and will apply starting 1 July 2016.  SBRR will allow small businesses to change the legal structure they are operating under without attracting certain taxes. In particular, in circumstances small businesses will not be subject to balancing adjustments for depreciating assets, trading stock, nor capital gains tax on other assets. While the law is a very welcome amendment to the previously rather rigid laws, some pronouncements are unclear and any guidelines from the ATO are welcome. However, we most likely will see many tax determinations and tax cases relating to SBRR in the coming years as this is a very complex area that triggers consequences in variety of tax laws. However, the SBRR looks to be a great way for small businesses to optimise their operating structure, legal compliance requirements and allow for some long term tax planning. Make sure you raise this topic next time you talk to your tax advisor.

With April starting, this is a great time to engage with you accountant and do some tax planning. Three months is often enough time to optimise your tax position for 30 June and combine it with the improvements in your business. Most importantly this can avoid any costly decisions and unpleasant surprises when the time comes to lodge you tax return!

The upcoming federal budget might be the start of big structural reform by the government, however there are no strong suggestions about any particular aspects at this stage, so watch this space!

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