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With the due date for FBT returns coming up, the following non-exhaustive checklist may prove useful in determining whether an employer has an FBT liability in the first place.

Although it will generally fall to your accountant to prepare the FBT return from your software file or other records, all of the instances where you have provided employees and/or their associates (eg, spouse) with a potential fringe benefit may not always be apparent to them. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist to refer to.

CAR FRINGE BENEFITS

Does a car fringe benefit arise? For FBT purposes a “car” is:

• Any motor-powered road vehicle (including a four-wheel drive) that is designed to carry:
  • Less than one tonne, and
  • Fewer than nine passengers.

Were any vehicles provided to employees (or associates) during the FBT year? You make a car available for private use by an employee on any day that either:

• The car is actually used for private purposes by the employee, or
• The car is available for the private use of the employee.

A car is treated as being available for private use by an employee on any day that either:

• The car is not at the employer’s premises, and the employee is allowed to use it for private purposes, or
• The car is garaged at the employee’s home.

If so, was the vehicle designed to carry less than one tonne and fewer than nine passengers? If so, the vehicle would be classified as a “car” for FBT purposes. If not, the provision of the vehicle may constitute a “residual fringe benefit” (see later). Different requirements in valuing the benefit then apply.

Exemptions

Is the vehicle a taxi, panel van or utility? If so, an exemption is available where there is private use of the vehicle by a current employee and the vehicle is either:

• A taxi, panel van or a utility designed to carry less than one tonne, or
• Any other road vehicle designed to carry less than one tonne which is not designed to principally carry passengers, and
• The employee’s use of such a vehicle is limited to:
  • Travel between home and work
  • Travel incidentals where travel expenses are incurred in the course of performing employment-related duties, and
  • Non-work-related use that is minor, infrequent and irregular. This means (according to the ATO) less than 1,000 kms of private vehicle use, with no single private use journey in excess of 200 kms. (The ATO expects the employer to exercise some oversight over the minor, infrequent and irregular use of the vehicle.)

Is the vehicle a dual cab vehicle? If so, the vehicle will qualify for the work-related use exemption only if:

• It is designed to carry a load of one tonne or more, and more than eight passengers, or
• While having a designed load capacity of less than one tonne, it is not designed for the principal purpose of carrying passengers.

Is the vehicle a “modified” vehicle? Certain modified vehicles are exempt from FBT where modifications permanently change a car and cannot be readily reversed for the car to be regularly used alternately as a passenger or non-passenger car. An example of such a vehicle is a hearse.

Is the vehicle an unregistered vehicle? If a car is unregistered for the full FBT year and used principally for business purposes (such as off-road or cars used on farms), any private use is exempt from FBT. A car that may be lawfully driven on a public road is regarded as being registered.

Does the vehicle qualify for the electric cars exemption? Zero or low emission vehicles (including plug-in hybrids) are exempt from FBT where they are first held from 1 July 2022 and made available to current employees or associates. This incentive will apply until at least 2027, when there is to be a review. The GST-inclusive cost of the EV cannot exceed $91,387, which is the Luxury Car Tax threshold for fuel-efficient vehicles for 2024-25. Plug-in hybrids will lose their exemption after 31 March 2025 unless there is a binding commitment to continue to provide the vehicle after that date.

CAR PARKING FRINGE BENEFITS

Does a car parking fringe benefit arise? A car parking fringe benefit arises in relation to a particular day where all of the following conditions are present on that day:

• The car is parked on business premises or associated premises of the provider.
• A commercial parking station is located within a 1km radius of the premises at which the car is parked.
• The lowest fee charged by the operator of any such commercial parking station located within a 1km radius for all-day parking on the first “business day” of the FBT year is more than the “car parking threshold” ($10.77 for the 2024/25 FBT year).
• The car is parked on the premises for more than four hours (cumulative) between 7:00 AM and 7:00 PM on that day.
• The car is used for travel between home and work at least once on that day.
• The provision of the parking facility is in respect of the employment of the employee.
• The car is owned by, leased to, or otherwise under the control of the employee.
• The employee has a primary place of employment on that day and the parking is at or in the vicinity of that primary place of employment.

Small Business Exemption Small businesses (gross turnover less than $10 million or aggregated turnover less than $50 million) are exempt from car parking FBT unless employees are using a commercial car parking station.

LOAN FRINGE BENEFITS

Does a loan fringe benefit arise?

• Has a loan been made by an employer (or associate) to an employee (or their associate)?
• Was the loan provided in respect of the employment of the employee?
• Do you know the date the loan was made?
• Do you know the amount of the loan?
• Do you know the purpose of the loan?
• Has interest been charged on the loan that is at a rate lower than the benchmark interest rate of 8.77% (2024/25)?

The loan is not a fringe benefit where it is either:

• Compliant with s109N ITAA 1936 for Division 7A purposes, or
• Treated as a deemed dividend under s109D ITAA 1936 for Division 7A purposes.

Exemptions

• Is the minor benefits exemption under s58P FBT Act applicable?
• Did the loan constitute an advance of money by the employer to the employee to meet employment-related expenditure which will be incurred within six months? If yes, an exemption is available.

DEBT WAIVER FRINGE BENEFITS

Has an employer (or their associate) released the employee (or their associate) from repaying an outstanding debt?

• A debt waiver fringe benefit arises.

Does the debt forgiveness give rise to a deemed dividend under Division 7A ITAA 1936?

• If so, the debt waiver does not constitute a fringe benefit.
• Section 109F ITAA 1936 may operate to treat a forgiven debt as a deemed dividend in the hands of a current or former shareholder (or associate) of a private company even if they are also an employee of the company (see s109ZB(2) ITAA 1936).

Does the debt waiver constitute the forgiveness of a genuine bad debt?

• If so, the debt waiver is exempt from FBT.

EXPENSE PAYMENT FRINGE BENEFITS

Does an expense payment fringe benefit arise?

• Did an employer (or their associate) pay or reimburse an employee (or their associate) for any expenses incurred by the employee (or their associate)?
• Was the payment or reimbursement for an item that was used solely for an income-generating purpose?
  • If yes, a fringe benefit does not arise. Employee to complete an Expense Payment Fringe Benefit Declaration.
• Was the expenditure reimbursement by the employer to the employee on a cents-per-kilometer basis?
  • If yes, the payment is FBT-exempt. Note that the employee will be assessed on this reimbursement.

Exemptions

• Is the minor benefits exemption under s58P FBT Act applicable?
• Is an exemption available for a work-related item which is used primarily in the employee’s employment?
  • These work-related items include a portable electronic device (including mobile phones, laptops, and tablet PCs), briefcase, tool of trade, computer software, or protective clothing. Specific conditions apply to the provision of portable electronic devices.
  • Employers who are eligible small businesses (i.e., aggregated annual turnover of less than $50 million) can provide multiple work-related portable electronic devices (such as laptops and tablets) in certain circumstances.
• Is an exemption available for the reimbursement of the following:
  • Membership fees and subscriptions to:
    • A trade or professional journal
    • Use of a corporate credit card, or
    • An airport lounge membership
  • Newspapers and periodicals to employees for business purposes
  • Expenses relating to emergency assistance such as:
    • First aid or other emergency health care
    • Emergency meals, food supplies, clothing, accommodation, transport, or use of household goods
    • Temporary repairs, and
    • Any similar matter.

BOARD FRINGE BENEFITS

Does a board fringe benefit arise?

• Was a meal provided to an employee (or their associate) where the following conditions are satisfied:
  • There is an entitlement under an industrial award or employment arrangement to be provided with residential accommodation and at least two meals per day.
  • The meal is supplied by either:
    • Where the employer is not a company – the employer, or
    • Where the employer is a company – the employer or a related company.
  • Either of the following applies:
    • The meal is cooked or prepared on the premises of the employer (or related company) and is provided to the recipient on employer’s premises (other than a public dining facility), or
    • The following conditions are satisfied:
      • The employee’s duties consist principally of duties to be performed in, or in connection with, an eligible dining facility of the employer or a facility for the provision of accommodation, recreation, or travel which includes the dining facility.
      • The meal is cooked or prepared in the cooking facility of the dining facility, and
      • The meal is provided to the recipient in the dining facility.
  • The facility in which the meal is cooked or prepared is not used wholly or principally for cooking or meal preparation for the employee or their associates.
  • The meal is not provided at a social function (e.g., party or reception).

LIVING-AWAY-FROM-HOME ALLOWANCE (LAFHA)

Does a LAFHA benefit arise?

• Was an employee paid an allowance by an employer as compensation for additional expenses because the employee was required to live away from their usual place of residence in Australia to perform employment duties during the FBT year?
  • If yes, the LAFHA rules may apply.

Declarations and Substantiation

• Have the relevant LAFHA declarations been sought from employees in receipt of allowances or benefits before the lodgment day of the FBT return?
  • The ATO has released on its website pro-forma LAFHA declarations, including for employees who fly-in, fly-out or drive-in, drive-out, employee-related expenses, and employees who maintain a home in Australia.
• Has documentary evidence been obtained from the employee to substantiate accommodation and food expenses (if reasonable amounts determined by the ATO are not being used)?
• Alternatively, has a declaration for employee-related expenses been obtained?
  • If a declaration is made, the record must be maintained for five years from its making.

Relocation Costs

• Were any of the following expenses incurred in relation to the employee relocating from their usual place of residence to perform employment-related duties:
  • Engagement of a relocation consultant
  • Removal and storage of household effects
  • Sale or acquisition of a dwelling
  • Connection or reconnection of certain utilities (e.g., water, electricity)
  • Transport of the employee (and family members) and any meals and accommodation en route to the new location?
  • The provision of such benefits either as an expense payment, property, or residual fringe benefit is typically exempt from FBT.

MEAL ENTERTAINMENT FRINGE BENEFITS

Does a meal entertainment fringe benefit arise?

• Has entertainment been provided to an employee (or their associate) by way of food or drink, accommodation, or travel in connection with the provision of food or drink or recreation?

Calculation of Taxable Value

• Has an election been made to use either the 50/50 split method or the 12-week register method?
• If no election is made, the benefit is typically treated as either a property, expense payment, or residual fringe benefit, and the taxable value is calculated based on the rules for those types of benefits (i.e., under the actual method).
  • 50/50 split method – Has all expenditure in respect of all persons been included?
  • 12-week register method:
    • Has all expenditure in respect of all persons been included?
    • Does the register include details of the date, cost, location, and persons in relation to the meal entertainment?
• See TR 97/17 for guidance on the various circumstances where food and drink is provided and the applicable FBT and income tax treatment.

Where the actual method is used:

• Has the food or drink been consumed by current employees on the employer’s business premises on a working day?
  • If so, apply the s41 FBT Act exemption relating to property benefits.
• Is the minor benefits exemption pursuant to s58P FBT Act applicable?

Reduction in Taxable Value

• Did the employee contribute towards the provision of the benefit?
  • If so, reduce the taxable value by the amount of the employee’s contribution.

HOUSING FRINGE BENEFITS

Does a housing fringe benefit arise?

• Has an employer (or their associate) provided an employee (or their associate) with a right to occupy a “unit of accommodation” as the usual place of residence of the employee (or their associate)?
  • A housing fringe benefit will arise except where an exemption applies.
  • An exemption will arise where the benefit constitutes remote area housing.

Reduction in Taxable Value

• Did the employee contribute towards the provision of the benefit?
  • Reduce the taxable value by the amount of the employee’s contribution.

ENTERTAINMENT LEASING FACILITY EXPENSES

Did an entertainment leasing facility expense fringe benefit arise?

• Has entertainment been provided to an employee (or their associate) by way of the employer incurring “entertainment leasing facility expenses”?
  • This includes the hire or leasing of a corporate box, boats, planes, or “other premises or facilities” for providing entertainment.

Exclusions

Expenses, or parts of expenses, that are not entertainment facility leasing expenses for these purposes include:

• Expenses attributable to providing food or beverages.
• Expenses attributable to advertising that would be an allowable income tax deduction.

TAX-EXEMPT BODY ENTERTAINMENT FRINGE BENEFITS

Does a tax-exempt body entertainment fringe benefit arise?

• A charity must be endorsed in order to be income tax-exempt.
• Has entertainment been provided to an employee by a tax-exempt body (an organisation that is wholly or partially exempt from tax)?
  • Where this is the case, a separate category of fringe benefit arises (“tax-exempt body entertainment fringe benefit”).
  • It is only non-deductible entertainment that falls within this category of benefit (e.g., a meal at a party).

Further Guidance

• Refer to TR 97/17 for more details on the treatment of entertainment fringe benefits.

Definition of a Tax-Exempt Body

A tax-exempt body is an entity that is either:

• Wholly exempt from income tax (e.g., a club that earns income from members only), or
• Partially exempt from income tax (e.g., a club that earns income from both members and non-members).

Calculation of Taxable Value

• The taxable value is equal to the expenditure incurred in the provision of the entertainment.

Reduction in Taxable Value

• Did the employee contribute towards the provision of the benefit?
  • If yes, reduce the taxable value by the amount of the employee’s contribution.

Exemption

• Is the minor benefits exemption under s58P FBT Act applicable?

PROPERTY FRINGE BENEFITS

Does a property fringe benefit arise?

• Was any property provided in respect of an employee’s employment?
  • Property includes both tangible and intangible property (e.g., goods, shares, and real property).

Exemption

• Is the minor benefits exemption under s58P FBT Act applicable?
• Is an exemption available for a work-related item that is used primarily in the employee’s employment?
  • Examples: A portable electronic device (including mobile phones, laptops, and tablet PCs), briefcase, tool of trade, computer software, or protective clothing.
• Is an exemption available for the provision of:
  • Membership fees and subscriptions to:
    • A trade or professional journal
    • Use of a corporate credit card, or
    • An airport lounge membership
  • Newspapers and periodicals to employees for business purposes
  • Expenses relating to emergency assistance, such as:
    • First aid or other emergency health care
    • Emergency meals, food supplies, clothing, accommodation, transport, or use of household goods
    • Temporary repairs, and
    • Any similar matter

RESIDUAL FRINGE BENEFITS

Does a residual fringe benefit arise?

• Has a fringe benefit been provided by an employer to an employee that does not fall within any other specific fringe benefit category in the FBT Act?

Exemption

• Is the minor benefits exemption under s58P FBT Act applicable?
• Is an exemption available for a work-related item that is used primarily in the employee’s employment?
  • Examples: A portable electronic device (including mobile phones, laptops, tablet PCs), briefcase, tool of trade, computer software, or protective clothing.
  • Small Business Benefit: Employers who are eligible small businesses (i.e., aggregated annual turnover of less than $50 million) can provide multiple work-related portable electronic devices.

FBT REBATE

Are you a rebatable employer?

Certain non-government, non-profit organisations are eligible for the FBT rebate. These include:

• Certain religious, educational, charitable, scientific, or public educational institutions
• Trade unions and employer associations
• Organisations established to encourage music, art, literature, science, a game, a sport, or animal races
• Organisations established for community service purposes
• Organisations established to promote the development of aviation or tourism
• Organisations established to promote the development of information and communications technology resources
• Organisations established to promote the development of agricultural, fishing, manufacturing, or industrial resources

Endorsement Requirement

• Endorsement for FBT rebatable status is required from the ATO for charities.

FBT Rebate Calculation

• Reduce FBT liability by a rebate equal to 47% of the gross liability, subject to a capping threshold.
• The capping threshold is $30,000 per employee per FBT year.
• The full capping threshold applies for the FBT year even if the employee was not employed by the organisation for the full year.

Did you know that if you own an asset (e.g., land or a factory or even a trademark) that someone else uses in carrying on a small business, then you might be entitled to the CGT small business concessions when you sell the asset?

And these concessions can either entirely or partially eliminate any capital gain you make on selling it (or at least defer it).

How It Works

This can occur, for example, when your asset is used by:

• Your spouse or a child under 18 in their own business (or one that you may be involved in also), such as where that small commercial property you own (or own jointly with your spouse) is used by your spouse in, say, that art frame, photography, or accounting business.
• A business carried on by a family company or family trust in which you have a relevant interest – although the rules can get a bit complicated where you are only a beneficiary in that family trust.
• The reverse situation – where an asset owned by a family company or family trust is used in a business carried on by a relevant shareholder or beneficiary (e.g., farmland).

Eligibility and Ownership

Importantly, these rules apply whether or not you lease the asset to the other person (or entity) that carries on the business.

These rules can also apply in appropriate circumstances where a testamentary trust continues to carry on the business that was carried on by the deceased – although in that case, it may be easier to access the concessions by having the executor or beneficiary (or surviving spouse) sell the relevant business asset within two years of the deceased’s death.

However, the rules only allow an asset owned by one person to qualify for the CGT small business concessions where it is used by another person (or entity) in their business if the parties are either “affiliates” or “connected entities” of each other, as defined under tax law.

Are You an Affiliate or Connected Entity?

Determining whether individuals or entities are affiliates or connected entities for the purposes of the CGT small business concessions can be complex and depends on the exact circumstances of the relevant parties.

Need Advice?

So, if you think you are in this situation – or propose to start a small business and intend to use assets owned by someone else in that business – speak to us first so that we can help you get the optimal CGT outcome.

If you own Bitcoin, or any other cryptocurrency, you may have been the beneficiary of Donald Trump’s election as President last November – which saw Bitcoin prices jump by almost 50% almost immediately after the election (and certainly in the following weeks).

And if you decided to take advantage of this and realise your gain by selling your Bitcoin, you may have a capital gains tax (CGT) problem, and a nasty one at that (albeit, it is only a tax problem – it is not a no-profit problem!).

So, if you have made a capital gain, you should consider a few things.

The ATO is Watching

Firstly, the Tax Office’s data matching capabilities regarding the buying and selling of Bitcoin are very extensive (and very good) – so, any idea of just not declaring your gain would bring with it big risks.

Secondly, like anything to do with tax, keep good records of your dealings with Bitcoin: it is both a legal requirement and will help you manage your tax affairs.

Using Capital Losses to Offset Gains

Thirdly, if you also have capital losses from your dealings in Bitcoin (or any other CGT assets) in either this income year or previous ones, you can use those losses to reduce any assessable capital gains from Bitcoin – and this will result in less tax being payable.

And the same rules apply to using any current or prior-year revenue or trading losses you have from any other activities. They too can be used to reduce your capital gains from Bitcoin.

50% CGT Discount

Fourthly, and importantly, like most capital gains from other assets, you are entitled to use the 50% discount to reduce the amount of assessable capital gain – provided you have owned the Bitcoin for more than 12 months.

Selling Bitcoin as a Foreign Resident

Finally, don’t forget that if you become a foreign resident for tax purposes, you will be deemed to have sold your Bitcoin for its market value at the time you left the country – or the CGT rules will subject you to Australian CGT if you sell it while you are overseas. (And don’t forget about the ATO’s extensive data matching capability in this regard!)

Are You Trading or Investing?

However, all this assumes you aren’t in the business of trading in Bitcoin. If this were the case, you would generally be taxed on your profits as ordinary business or other income – without the benefit of the accompanying concessions.

The other thing to be wary of is that the ATO has specific guidelines about how it treats Bitcoin and these can be difficult to apply to a particular situation.

Need Help?

So, if you have a Bitcoin problem, come and speak to us about it – and we will help you get things right (and maybe even find a legitimate way to reduce the ultimate tax payable on it).

Super is a great way to save for retirement. It offers an opportunity to invest in long-term growth assets and enjoy generous tax concessions along the way. For those wanting to make extra contributions and reduce their personal tax bill, there are two options:

• Salary sacrifice, and
• Personal deductible contributions (PDCs).

Both have their benefits, and choosing the right method depends on your cash flow, flexibility needs and personal preference. Let’s break them down.

What Are Salary Sacrifice and Personal Deductible Contributions?

1. Salary Sacrifice

Your employer deducts a portion of your pre-tax salary and contributes it to your super fund.

2. Personal Deductible Contributions (PDCs)

You make voluntary contributions from after-tax money and later claim a tax deduction when you lodge your tax return.

Salary Sacrifice

Benefits of Salary Sacrifice

• Timing – Salary sacrifice contributions reduce your taxable income immediately, meaning your employer will withhold less tax, and you will immediately enjoy the tax saving. PDCs provide a tax deduction when you lodge your tax return, meaning you do not get the tax benefit until later.
• Discipline – Salary sacrifice is automatic and helps maintain savings discipline.
• Simplicity – Salary sacrifice can be much simpler and less administrative. PDCs require you to submit paperwork to the super fund known as a “notice of intent” form. This paperwork must be submitted within strict timeframes. With salary sacrifice, you do not need to worry about such paperwork.

When Salary Sacrifice Is a Winner

Salary sacrifice is a winner for employees who:

• Prefer a “set-and-forget” approach to growing their super.
• Have regular income and want a simple way to contribute.
• Want to ensure their contributions are made gradually over the year to benefit from “dollar cost averaging”. This reduces the risk of “going all in” at the peak of the market.

Personal Deductible Contributions

Benefits of Personal Deductible Contributions

• Availability – Salary sacrifice is only available to employees. If you are not employed, you can’t salary sacrifice. Instead, you might be able to make a PDC to super.
• Flexibility – PDCs offer greater flexibility, allowing you to contribute lump sums at any time during the financial year.
• Reversibility – After making the contribution and submitting paperwork to claim the deduction, you might change your mind. Perhaps you have insufficient income to justify claiming a deduction and would prefer that contribution not be subject to the 15% “contributions tax”. It may be possible to “reverse” the contributions tax and not claim the deduction, but unless you have retired or met a condition of release, the contribution will remain “stuck” in super.

When Personal Deductible Contributions Are a Winner

PDCs are a winner for people who:

• Want greater control over when and how much they contribute.
• Have variable income or expect a large one-off payment (e.g., bonus, inheritance, asset sale).
• Are self-employed or receive income from multiple sources.
• Want to contribute additional amounts closer to the end of the financial year to maximise their tax deduction.

Enjoy the Best of Both Worlds: Combining Salary Sacrifice and PDCs

Many people use both strategies to maximise their super contributions efficiently. For example:

• Setting up salary sacrifice to contribute steadily throughout the year.
• Making a PDC at the end of the financial year if additional concessional contribution (CC) cap space is available.
• Adjusting contributions based on unexpected income or bonuses.

Conclusion

Salary sacrifice and PDCs each have their advantages, and the right choice depends on your employment, cash flow, and personal preference. By speaking to your adviser about how each method works, you can make informed decisions to optimise your retirement savings while also reducing your tax bill.

The Australian Tax Office (ATO) has released new guidance (TD 2024/7) on when financial advice fees can be claimed as a tax deduction. Overall, the ATO has not changed its view but it has given more clarity around the deductibility of upfront and ongoing fees.

Key points to know

Some of the key takeaways from this determination include:

• If you receive financial advice that includes tax-related advice, you may be able to claim a deduction, but only if the advice comes from a qualified tax professional.
• Upfront fees for initial advice (e.g., setting up a financial plan) related to structuring investments are generally non-deductible, as they are considered capital expenses. However, if the advice relates to managing investments for income production or relates to managing tax obligations, it may be deductible.
• Ongoing advice fees can be deductible if they’re related to income-generating activities.
• To be deductible under tax law, the fees must relate to you gaining or producing assessable income. If only part of the advice is income-related, you can only claim a partial deduction.

In essence, advice fees must be linked directly to producing assessable income to qualify for deductions. For example, fees paid for advice that helps manage existing investments producing income can be deductible, but fees for advice on structuring investments or creating a financial plan won’t be. Understanding the distinction between capital and income-related advice fees is key for ensuring that tax deductions are properly applied.

Who isn’t covered

The rules in this determination do not apply to individuals running an investment business or address scenarios where financial advice fees are paid from a superannuation fund.

Why this matters

This update helps clarify what types of financial advice fees you can and can’t claim, making it easier to understand which expenses are deductible and which are not.

To make sure you are meeting all the ATO’s criteria for claiming these deductions, it’s important to work with your accountant or financial adviser to properly categorise your financial advice costs. This will help you make the most of the available deductions while staying compliant with the tax law.

Superannuation is often seen as untouchable savings for retirement, but did you know it can also be a lifeline during financial difficulty? While super is designed for retirement, there are rules to allow it to provide financial support in several situations. Let’s explore these rules and how super might offer relief in times of crisis.

Accessing super on compassionate grounds

If you’re dealing with specific expenses that you simply can’t afford, you may be able to access your super on “compassionate grounds.” This option allows you to withdraw a lump sum to cover certain expenses, which may include:

• Eligible medical treatment or associated transport costs
• Modifications to your home or vehicle to accommodate a disability
• Palliative care for yourself or a dependent with a terminal illness
• Funeral expenses for a dependent
• Preventing the foreclosure or forced sale of your home

There is no set limit on how much super you can access under compassionate grounds, except when it comes to mortgage relief which is restricted to the sum of three months repayments and 12 months of interest on the outstanding balance of the loan. Mortgage relief only applies to principal homes and not investment properties.

To apply, you’ll need to submit your application to the Australian Taxation Office (ATO). This can be done online through myGov or by requesting a paper form from the ATO. This process also applies to individuals with a self-managed super fund (SMSF). SMSF trustees also require the ATO’s approval before accessing their super early under compassionate grounds. Once approved, you’ll need to provide the approval letter to your super fund to facilitate the release of funds. Keep in mind that tax may apply to your withdrawal.

Severe financial hardship

If you do not qualify for an eligible expense under “compassionate grounds” but are struggling financially and receiving a Centrelink income support payment, you may qualify to access your super under severe financial hardship. The rules for this depend on your age:

• If you’re under 60 and 39 weeks: You can make one withdrawal of up to $10,000 in a 12-month period if:
  • You’ve been receiving an income support payment (like JobSeeker Payment) for at least 26 continuous weeks, and
  • You can’t meet immediate and reasonable family living expenses, such as mortgage repayments.
• If you’re older than 60 and 39 weeks: There are no limits on the amount you can withdraw if:
  • You’ve received an income support payment for at least 39 weeks since reaching 60 years of age, and
  • You’re not currently employed.

For those in this category, you may be able to access your full super balance.

To apply for early super release due to severe financial hardship, you’ll need to contact your super fund directly, as they are responsible for assessing your claim. The same rules apply to individuals with an SMSF, where trustees are legally required to evaluate member applications using the same severe financial hardship eligibility criteria.

Final thoughts

It can be reassuring to know that your super isn’t entirely locked away if you find yourself in financial difficulty. Whether it’s to cover urgent medical expenses, prevent losing your home, or simply make ends meet, these provisions can provide much-needed relief. Of course, accessing your super early means you’ll have less saved for retirement, so it’s important to weigh up your options carefully. Also, keep in mind, tax may apply on your withdrawal.

If you are thinking of accessing your super due to financial difficulty, consider reaching out to your adviser who can help you navigate the process.

The unofficial federal election campaign is now well under way, with Opposition Leader Peter Dutton announcing a couple of tax policies while out on the hustings in Queensland on 19 January.

We’re drawing these developments to your attention in order to keep you informed about what the tax landscape might look like post-election after announcements from the major parties. We appreciate that people make their voting decisions for all sorts of reasons, and small business tax policy is unlikely to affect the election result in one way or another. And we would never suggest how you should direct your votes – that’s none of our business.

Entertainment expenses – return of the boozy lunch?

In an effort to boost the hospitality sector, the Coalition promises full deductibility and no FBT for up to $20,000 a year spent on the cost of food and entertainment at clubs, pubs and restaurants, but not for the cost of alcohol. Intriguingly, the announcement states that the new policy will run for an initial two-year period, perhaps suggesting that the Coalition may be open to extending it beyond two years.

The proposal will apply to businesses with an annual turnover of up to $10 million. The policy has not been costed, at least not publicly – that will presumably come later in the campaign.

So, what’s being proposed is not a switching off of the non-deductible entertainment rules across the board. Football, tennis and theatre tickets and the like will remain non-deductible and/or subject to FBT where employees are involved. This is a carve-out for meals and associated entertainment only.

The alcohol exclusion is a win for sobriety, but in any case, workplace practices have changed since the 1980s and 1990s, with many workplaces having testing protocols with a zero tolerance for drugs and alcohol. Some older readers may look back nostalgically to the lunchtime exploits of yesteryear, but for the most part societal attitudes have moved on.

Whether this policy would be the shot in the arm the Coalition is hoping for remains to be seen. When the entertainment regime was first announced in 1985, many were predicting the swift demise of the hospitality industry, only to be proven wrong as business adjusted pretty quickly to the new rules. And there were still plenty of long lunches in the late 80s and 90s. The reverse is entirely possible – that the slight loosening up of the rules will not do very much to change business behaviour.

But every little bit helps, and it is likely this two-year boost in deductibility for meals and entertainment will be welcomed by small businesses.

Instant asset write-off (IAWO) threshold

Another point of differentiation is the IAWO threshold, which is the amount below which small businesses (annual turnover up to $10 million) can take an immediate tax write-off for the cost of acquiring a depreciating asset.

The Coalition is proposing to set the threshold at $30,000 and, importantly, to make it a permanent feature of the tax law. As things currently stand, the existing $20,000 has to be legislated on a year-by-year basis, otherwise the threshold reverts to $1,000. The legislation establishing the $20,000 threshold for the 2023-24 income year was only passed days before 30 June 2024, which may have dampened its incentive effect.

The announcement does not include a start date for the $30,000 regime. If the Coalition were to be elected this year and legislation was introduced speedily, it could apply to assets acquired in the 2024-25 income year, although commencement seems more likely to slip one year to the 2025-26 year.

On any objective basis, $30,000 is better than $20,000. Let’s hope this announcement sets off a small business tax bidding war.

Feeding its seemingly insatiable appetite for rental data, the ATO has recently announced it will soon be collecting rental bond details for some 2.2 million individuals.

The data, which will be collected twice a year from State and Territory bond regulators, is very comprehensive, and will include personal details such as names, addresses, dates of birth, telephone numbers, email addresses and bank account details for rental providers and tenants. The data obtained will also include business-related information for managing agents.

Also included will be the address of the leased property, the term of the lease, lease commencement and end dates, bond amounts, rent payable and payment intervals.

The ATO will also be seeking information about the characteristics of the leased property, including the type of dwelling, the number of bedrooms and a unique identifier for the rented property.

This latest quest for rental data comes after the ATO also acquired property management data records for 2.3 million rental providers from software companies last year.

The project is aimed at identifying those who may not have properly disclosed their rental income, or accounted for capital gains tax (CGT) due on the disposal of their rental property. Clearly, the ATO believes there is still significant under-reporting in this area and that the level of compliance needs to be improved. How much under-reporting of rental income there is remains to be seen.

Where people are letting their properties outside of the rental bond framework by using short stay platforms such as Airbnb, the ATO already knows about those arrangements, having obtained the information from the platform providers.

Rental income from short-term stays or even renting out a bedroom in your home has to be disclosed as assessable income in the same way as rental income from the long-term lease of a house or an apartment, although there can be some tricky issues around the apportionment of expenses when claiming deductions.

Many taxpayers with investment properties can expect to be subject to some sort of ATO attention in the coming years and it may be worth double checking that the way these transactions have been disclosed in your tax returns is 100% correct. If not, the best way to set things right would be by making a voluntary disclosure to the ATO before they start asking questions.

Issues that could be raised on audit include:

• The repairs vs improvement issue – There can be a fine line between work carried out that is a genuine repair (and tax deductible up front) and an improvement (generally deductible over time). Even where something is a genuine repair, it may not be deductible if the work is carried out immediately after acquiring the property and before any tenants are put in.
• Bond retentions – Where part of the bond is retained at the end of a tenancy because of damage caused by the tenants, the amount retained needs to be disclosed as assessable income. The cost of any associated repairs would generally be deductible.
• Interest deductibility – Where you have a mortgage over an investment property and the loan was used to acquire the property (or any other income-producing asset), interest will be deductible, provided the property is being let or is available to let. But where you already own an investment property free and clear and borrow against it to pay off the mortgage on your main residence or use the money to buy a car or fund a holiday, the interest is non-deductible. It’s the use of the borrowed funds that determines interest deductibility.
• Is that holiday house genuinely available for rent? – Unless your beach house is exclusively used for rental purposes, and is never used by family members or friends free of charge or below market value, there are always issues around the apportionment of expenses. Advertising the property at an unrealistic price is not regarded as making it genuinely available for rent, which will affect apportionment.
• Inherited property – There is a myriad of CGT issues around the sale of an inherited property, including where it has been used for rental purposes.

We’re happy to help you review any of these issues.

Superannuation rules are always changing, and 2025 is set to bring some updates that could affect your retirement savings. Whether you’re just starting to build your super or already planning for retirement, keeping up with these changes can help you make informed decisions. Here’s what’s on the horizon.

1. Possible tax changes for large superannuation balances

The government is looking at increasing taxes on large super balances. The proposal would add an extra 15% tax on the earnings of super balances over $3 million, starting from 1 July 2025. This has been a hot topic, with debates about whether the tax system for super is fair.

The proposal made it through the House of Representatives in 2023 but ran into problems in the Senate in late 2024. To pass, the government needs support from minor parties and independent senators, but many are pushing back against key parts of the plan, such as taxing unrealised gains (profits on investments that haven’t been sold) and not adjusting the $3 million threshold over time.

With a federal election coming up, it’s unclear if this tax change will go ahead. If it doesn’t pass soon, it may be delayed or scrapped altogether. The Senate will revisit the issue in February 2025, so we’ll have to wait and see what happens next.

2. Increase in employer superannuation guarantee contributions

A key change in 2025 is the rise in the super guarantee (SG), which is the portion of your wage that your employer must contribute to your super fund. From 1 July 2025, the SG rate will increase from 11.5% to 12%. While this might seem like a small increase, it can make a significant difference over time, helping your retirement savings grow. If you’re an employee, this means more money going into your super, but it’s also worth checking if it affects your overall salary package.

3. Potential increase to transfer balance cap

Although contribution caps increased in July 2024 due to inflation adjustments, they are not expected to rise again in July 2025.

However, the transfer balance cap (TBC) – which limits how much super can be moved into a retirement pension – will increase from $1.9 million to $2 million on 1 July 2025.

This change mainly affects people who haven’t yet started drawing a retirement income from their super. If you already receive a pension from your super, you might still benefit from a partial increase, depending on your individual circumstances.

4. Impact on total superannuation balance

As the TBC rises on 1 July 2025, the total super balance (TSB) limit will increase as well. This limit affects how much you can contribute to your super using after-tax dollars, known as non-concessional contributions (NCCs).

The expected increase in TSB thresholds will determine how much extra you can contribute, including whether you can use the bring-forward rule, which allows you to make larger contributions over a shorter period. The table below shows a breakdown of the expected limits for 2025.

These changes may create opportunities for some individuals to grow their super, but it’s important to understand how the new limits apply to your personal situation.

5. New rules for older legacy pensions

In December 2024, the government introduced new rules to give people more flexibility in managing older “legacy pensions.”

For years, some retirees with lifetime, life expectancy, and market-linked pensions in self-managed super funds (SMSFs) have faced strict rules that made it difficult to change or adjust these pensions. These products can no longer be started in SMSFs, and many people have been stuck in outdated pensions that no longer suit their needs.

Previously, the only way to change these pensions was to convert them into similar products, which came with limits on how reserves could be allocated that did not count towards the member’s contribution caps.

But with the new rules now in place, people with legacy pensions have five years to review their options and make changes if needed. Since these decisions can be complex, it’s a good idea to speak with a financial adviser, especially one who specialises in SMSFs, before making any changes.

6. Improved super fund performance and transparency

Large APRA-regulated super funds are under pressure to deliver better performance and be more transparent with their members. In 2025, expect to see:

• Continued focus on underperforming funds: Funds that don’t deliver strong returns may face more scrutiny or even be forced to merge.
• Better reporting on fees and investment performance: Members should receive clearer information about where their money is invested and what fees they’re paying.

Comparing super funds has become easier, helping you make more informed decisions about where to keep your retirement savings.

7. Technology and digital innovation in super

Technology is playing a bigger role in superannuation, and 2025 will likely see more innovation. Super funds are investing in better online tools, mobile apps, and artificial intelligence to help members track their savings and make smarter investment choices. If you haven’t already, it’s worth exploring your super fund’s digital tools to take control of your retirement planning.

Final thoughts

Superannuation is a long-term investment, and small changes can have a big impact over time. With the start of a new year, take the time to review your super, stay informed about potential changes, and consider speaking to a financial adviser if needed. With the right strategies, you can make sure your super is working hard for your future retirement.

Have you ever wondered how your super balance compares to others in your age group? Or maybe you’re curious about how much you should have saved by now to ensure a comfortable retirement? It’s not always easy to figure out if your super is on track, but understanding how it stacks up can help you make smarter decisions now that will benefit you later. This article looks into the average super balances for people of different ages and explores how much you may need in retirement.

Average balances of Australians

The Australian Taxation Office (ATO) has released data showing average super balances for different age groups. The data gives a helpful overview of where Australians are at in terms of their retirement savings. Here’s how the averages break down:

Source: ATO Statistics 2021–22: Median super balance, by age and sex, 2021–22 financial year

You might be looking at your super balance right now, feeling either satisfied or a little worried about how it measures up to these averages. Remember, averages don’t tell the whole story. Your balance can be impacted by various factors like career breaks, part-time work, salary levels, or investment decisions. If you’ve made additional contributions or opted for higher-growth investment options, your balance may be above average. If it’s not quite where you’d like it to be, don’t worry – there’s still plenty of opportunity to take steps and get back on track.

How much super do you need in retirement?

Understanding what you’ll need in retirement can help you gauge whether your super balance is on track. The Association of Superannuation Funds of Australia (ASFA) provides clear benchmarks to define what a “comfortable” or “modest” retirement might look like.

A modest retirement covers basic living expenses, with most of the income coming from the age pension. On the other hand, a comfortable retirement allows for a higher standard of living, including private health insurance, a reliable car, household upgrades, and leisure activities like holidays.

Here’s what ASFA estimates you’ll need if you retire at 65, own your home outright, and are in good health:

Source: ASFA retirement standard budget for retirees aged 65 to 84 (June quarter 2024)

Knowing these benchmarks can help you assess your progress and plan for the future you want.

Are you on track?

Now that you know what the average super balance looks like, and you have a better idea of how much you may need, it’s time to check where your super stands. If your balance is lower than the targets set by ASFA, don’t panic – it’s never too late to take action. You can still take steps to boost your super and make it work harder for your retirement.

Consider making extra contributions, whether through salary sacrificing or personal after-tax payments. Reviewing your investment strategy to ensure it aligns with your goals and risk tolerance is also important. If you’re unsure about what changes to make, it could be helpful to speak to a financial adviser who can offer tailored advice for your situation.

Super is an essential part of your retirement planning, and understanding where you stand can help you make smarter choices today. Whether you’re feeling confident about your balance or realising there’s more work to be done, it’s always worth taking the time to review and plan ahead. The sooner you act, the more time your super will have to grow – putting you in a better position to enjoy your golden years.