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Does the running of your business require you to spend money on fuel for vehicles like plant equipment, heavy vehicles or even light vehicles travelling off public roads? If so, Fuel Tax Credits (FTC) may be your friend at tax time.
Let’s take a closer look at what FTC is and how it might work for your business…
Fuel Tax Credits (FTC) is a tax refund system that applies to businesses that use fuel for their operations. The system allows businesses to claim a credit for the fuel tax that has been included in the price of fuel purchased for use in their operations. This credit can then be used to offset other tax liabilities owed by the business. The FTC system is designed to help businesses manage their fuel costs and encourage the use of more fuel-efficient vehicles and equipment.
FTC applies to a range of fuels, including petrol, diesel, and liquefied petroleum gas (LPG), as well as a range of other fuels used in specific industries. The amount of FTC that a business can claim depends on the type of fuel used, the business's activities, and the percentage of fuel used for business purposes.
The FTC system is an important tool for businesses that rely on fuel to operate. It can help to reduce fuel costs, which can be a significant expense for some industries. For example, transport and logistics companies rely heavily on fuel to operate their fleets, and the cost of fuel can have a significant impact on their bottom line.
To claim FTC, you need to register your business with theAustralian Taxation Office. Once registered, you can claim the credit on yourBusiness Activity Statement (BAS). The credit can then be used to offset other tax liabilities owed by the business, such as income tax, goods and services tax (GST), and even fringe benefits tax.
As with any business expense, it’s important to keep accurate records of fuel purchases and usage to ensure that you are claiming the correct amount of FTC. It’s also important to note, that the ATO may conduct audits of businesses that claim FTC to ensure that they are complying with the rules and regulations of the system.
On the flip side, the FTC system is also designed to encourage businesses to use more fuel-efficient vehicles and equipment.Businesses that use more fuel-efficient vehicles and equipment will be eligible for a higher FTC rate, which can help to offset the higher cost of these vehicles and equipment.
This is a good a reason as any to consider how your business could lower fuel consumption and costs (see our article about tax incentives for going electric here.
In addition to the standard FTC rate, there are also a range of special rules and rates that apply to certain industries and activities. For example, the agriculture industry is eligible for a higher rate of FTC for diesel used in farming activities, while businesses in the mining industry are eligible for a higher rate of FTC for diesel used in off-road activities.
The ATO provides a range of resources and tools to help businesses understand and comply with the FTC system. These resources include an online calculator to help businesses calculate their FTC entitlements, as well as guidance and information on the rules and regulations of the system.
You can start looking into the FTC on ATOs website.
If you’re looking for more tailored strategic advice to suit your business and its operations, give the Attune team a call on 1300 866 113or send us an email to start the conversation.
For beer lovers in Australia, the price of their beloved beverage has been steadily increasing. While many factors contribute to this, one of the most significant is the country's tax on alcoholic beverages. This tax, known as excise duty, is added to the cost of all alcoholic drinks, including beer. As a result, Australian beer is in the top 25% most expensive in the world.
Excise duty is a tax imposed on the production or sale of certain goods, including alcohol. The tax is levied by the federal government and is designed to raise revenue while also discouraging excessive consumption of alcohol. The rate of excise duty applied to beer varies depending on the alcohol content of the beverage. In Australia, the current rate of excise duty on beer is AUD $49.67 per litre of pure alcohol.
This high rate of excise duty has led to significant increases in the price of beer in Australia. According to a report by the AustralianBureau of Statistics, the average price of a carton of beer in the country has increased by over 50% in the past decade. This rise in price is largely due to the impact of excise duty.
In fact,Australia's beer tax rises twice each year, as it is indexed to inflation. So, every time inflation rises, so too does the excise. It’s easy to see how 2022 and 2023 so far have impacted the cost of alcohol with this in mind.
The impact of excise duty on beer prices is further exacerbated by the Goods and Services Tax (GST) imposed on all goods and services sold here. In the case of beer, the GST is added to the total price, including the excise duty. As a result, Australians pay tax on tax, resulting in what the Brewers Association says made the government $3.593 billion in2018-2019 fiscal year alone! Weigh that number against what would likely be much higher for 2022-23 year considering excise increases.
All-in-all though, Australia ranks somewhere between 23rd and 27th most expensive in the world for beer, so we could be worse off.
While the high cost of beer in Australia may be frustrating for beer lovers, it is important to recognise the role that excise duty plays in this. While there may be arguments for reducing or removing the tax, it is important to consider the potential consequences of doing so. For example, reducing excise duty on beer could lead to increased alcohol consumption, which could have negative impacts on public health and social wellbeing.
Tax may be a bitter pill for some, but when you consider the benefits that our tax dollars give us overall, we’ve got little to complain about.
As with any tax matter pertaining to your personal or business activity, the Attune team are here to offer you tailored, strategic advice to help you achieve your financial goals. If you’d like to discuss your situation, give the team a call on 1300 866 113 or send us an email to start the conversation.
As the world continues to prioritise reducing carbon emissions, the demand for electric cars is on the rise. In Australia, the government has been encouraging the purchase of electric vehicles (EVs) by providing tax incentives to both individuals and businesses. The key example here is that from July 1 2022, employers don’t pay Fringe Benefits Tax (FBT) on eligible electric cars and associated expenses!
Here we’ll break down the incentive a little more, discuss eligibility and look at why you should seriously consider an EV for your business vehicle needs …
The FBT is a tax that employers pay on certain benefits they provide to their employees in addition to their salary or wages. These benefits are referred to as fringe benefits and can include things like company cars, health insurance, and expense accounts. However, electric cars and associated expenses are exempt from FBT under certain conditions and that’s why we’re here…
Eligibility:
To be eligible for the FBT exemption, the electric car must be classified as a “low emissions vehicle” and meet specific criteria set by the Australian Taxation Office (ATO). The car must have zero or very low carbon dioxide emissions and must be capable of being driven solely by an electric motor. Additionally, the electric car must not be designed for off-road use and must not have a carrying capacity of more than one tonne (which may rule your business out).
In addition to the FBT exemption on eligible electric cars, employers can also claim deductions for associated expenses such as electricity used to recharge the car, repairs and maintenance, and even car parking costs.These deductions can be substantial and can help offset the initial cost of purchasing an electric car.
Despite the potential cost savings, to date, many employers are not taking advantage of these exemptions and deductions. According to a recent survey by the Electric Vehicle Council, surprisingly, only 12% ofAustralian businesses currently offer electric cars as part of their company fleet. This is despite the fact that electric cars can be cheaper to run and maintain than traditional petrol or diesel cars.
Well, it would have to first fit your business needs, then fit into the eligibility criteria to make it completely worthwhile, but one of the main reasons for the low uptake of electric cars by businesses so far is the perception that they are too expensive. And, while electric cars can have a higher upfront cost than petrol or diesel cars, the FBT exemption and associated expense deductions can significantly reduce the overall cost of ownership. Additionally, electric cars can generally have lower fuel and maintenance costs, which can further reduce costs over time.
Another reason why employers may not be taking advantage of the FBT exemption is a lack of understanding of the eligibility criteria and the claiming process. We can help here, so if you’re considering a new vehicle for your business, speak with the Attune team so we can show you the options that fit your situation best (including incentives available).
By not taking advantage of the FBT exemption on eligible electric cars and associated expenses, employers may be missing out on significant cost savings. Additionally, encouraging the use of electric cars can help businesses reduce their carbon footprint and contribute to the fight against climate change. That sounds like a couple of big wins to us!
The FBT exemption on eligible electric cars and associated expenses is a valuable tax incentive that employers should take advantage of. So if you’re in the market and would like to discuss how an EV might work for your business (from a taxation perspective), call the Attune team on 1300 866 113 or send us an email to start the conversation.
Treasurer Jim Chalmers recently announced plans to double the tax rate on superannuation balances over $3m from 15 to 30 per cent, but the plans are under fire for just how much they’ll affect those who’ve worked hard for it. As it turns out that could be around 500,000 Australians who’ll be paying tax on their super at 30% when the legislation kicks in during 2025.
According to Prime Minister Anthony Albanese this change will impact approximately 80,000 people. However, the Financial ServicesCouncil (FSC) has found that six times as many Australians could be affected, estimating that about 500,000 people could be impacted in the long-term when younger generations retire. The FSC stated that the $3 million cap is not indexed to inflation, which means that a 30-year-old will have a real cap of around $1 million in today's dollars, raising questions about intergenerational fairness.
As it stands today, the superannuation tax concessions cost the government around $50 billion per year, and Albanese claims that this reform will make the country's $3.3 trillion super system more sustainable.However, Shadow Treasurer Angus Taylor argued that superannuation isAustralians' money and should be left alone, especially as many Australians are struggling to make ends meet with rising interest rates.
It’s bitter-sweet that the change will not be retrospective, rather, it will apply to future earnings and come into effect after the next election.
In 2023, the average superannuation balance is approximately$150,000, and the number of Australians with over $3 million in their super, all the way up to $400 million, is minimal, according to Treasurer Jim Chalmers but again, this is arguable…
Overall, the change to superannuation tax concessions will affect a relatively small number of Australians in the short term, but it could have broader implications in the long term, especially as younger generations retire. Regardless, the government has argued that it is necessary to make the super system more sustainable, given the significant cost of superannuation tax concessions.
If you’d like to discuss your superannuation in it’s current state and how you might be looking as this change comes into affect, reach out to the Attune team for strategic, tailored advice to help you set your retirement up the way you want it. Call the team on 1300 866 113 or send us an email to start the conversation – don’t wait until it’s time to put the tools down.
