We are sure it is only coincidental that major changes to the tax system share their start date with April fool’s day, but here is what you need to know for today:
- If you are earning over $180,000 (the top marginal bracket) you will receive a 2% ‘debt tax’ as part of the 2014 Federal Budget, until 1 April 2017.
- The Fringe Benefit Tax Rate (FBT) will increase from 47% to 49% in line with the debt tax, so will revert back at the same time.
- The gross up rate for reportable fringe benefits will increase for 2.1463 for type 1, and 1.9608 for type 2 (type 2 is used for employee payment summaries). This is important if you are salary sacrificing any items.
Both employers and employees should review their FBT liabilities and salary sacrificing arrangements respectively to ensure that savings are not being eroded.
For those in the not for profit arena, you will be largely unaffected as the maximum value of the capped FBT exemption has gone up to allow for the increases. If you are outside of your cap though, you should review your arrangements.
As always, if you are unsure of how changes may affect your financial position please contact your accountant or tax advisor.