TAX BULLETIN UPDATE 12th January 2023

Section 100A Update

Trust reimbursement arrangements
The ATO has issued TR 2022/4 and PCG 2022/2 which have huge significance for beneficiaries and trusts.
The tax office has effectively taken a stick to trust distributions unless effectively the cash follows for the trust distributions.
In respect of loans to adult children by parents, any trust distributions offset against this loan in our view would need to be documented.
The rulings are complex and have traffic light systems as to acceptance by the ATO as to arrangements.
The ruling effectively applies from 01.07.22 but the ATO will have the right to review previous arrangements before this date without allocation of specific administration resource thereon. Any amendments by the ATO will apply within 4 years of lodgement of the tax return as the time limit thereon.
Please contact our office should you require further details thereon.

Electric Cars
Are now exempt from FBT (Fringe Benefit Tax) if
1. they are first held and used on or after 1 July 2022;
2. where the first retail sale of the car is below the luxury car tax threshold or fuel efficient cars ($84,916 in 2022-23)

Employers
This initiative will save employers who implement for example on a $48,000 electric vehicle, previous FBT on a statutory method of 20% was FBT of $9,385.06. FBT now - Nil (A huge recurring saving)

Employees
An employee who enters into salary sacrifice arrangement on a novated lease.
Example - $150,000 salary with $25,000 salary sacrificed car and running costs (pre-tax)
Estimated savings tax post tax for employees $9,250.
Therefore, employees should review the above arrangements and maximise your claim where possible.

Reportable fringe benefits
Interestingly although exempt for tax, benefits are still reportable and would not change reportable amounts for any healthcare, childcare subsidy etc claims and would still count as income thereon.

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.