Companies with an income year that ended on 30 June 2023 must register their Research and Development (R&D) activities with AusIndustry by 30 April 2024. Requests for an extension of 14 days (or less) made before the deadline will be approved.

What’s the benefit?

The R&D Tax Incentive can provide a substantial benefit depending on the company’s turnover as follows:

• Less than $20 million turnover – Access up to a 43.5% cash refund on eligible R&D expenditure incurred in the 2023 income year
• Greater than $20 million turnover – Access a tax saving between 8.5% and 16.5% on eligible R&D expenditure incurred in the 2023 income year

A wide range of R&D expenditure can qualify under the program, including salaries, consultants, materials and overheads such as rent and electricity.

Who can apply?

The R&D Tax Incentive is an industry wide program open to all companies developing new or improved products, processes or services. This includes companies in the following sectors:

• Food and beverage
• Manufacturing
• Technology
• Agribusiness
• Biotech and MedTech

Next steps – Contact FSA

If you are considering submitting a 2023 income year R&D claim, it is important to seek advice as soon as possible in the lead up to the 30 April 2024 application deadline. Our R&D Tax and Government Incentives specialist consultants can help you assess your R&D activities and navigate the application process.

Small businesses with an aggregated annual turnover of less than $50 million may be eligible for the small business skills and training boost. This boost can give you an additional 20% bonus tax deduction for eligible expenditure incurred on training new and existing employees.

Small businesses which are eligible for this boost can claim a deduction on expenditure for external training courses delivered to their employees, either in person in Australia or online. The training must be provided by a registered external training provider.

The boost is available until 30 June 2024, so if you have been thinking about upskilling your employees, now is the time.

Editor: If you would like more information on your businesses eligibility and how to apply, please contact our office.

ASIC has commenced its first prosecution action against a director for failing to comply with their obligation to have a director identification number (director ID). The director was formally charged with one count of contravening section 1272C(1) of the Corporations Act 2001. The defendant in this matter is facing a maximum penalty of $13,320.

This is a reminder to all current and intending directors, that they are required by law to verify their identity and obtained a director ID via the Australian Business Registry Services (ABRS). Failure to do so is a criminal offence and may attract significant criminal and/or civil penalties.

All new directors must apply before being appointed. ASIC Registered Agents are encouraged to remind directors of this obligation and to not proceed with an appointment without proof a director has applied.

This also serves as a warning to any director who has not yet obtained a director ID. The ABRS/ASIC are monitoring compliance and are working with directors to encourage them to apply where they haven’t done so. However, ASIC has shown that it will not hesitate to prosecute if repeated directions to apply are ignored!

Editor: If you need more information regarding applying for your Director ID, please contact our office.

Taxpayers should remember that, if over half their income is from a contract for their personal effort or skills, then their income is classified as personal services income (‘PSI’).

Taxpayers can receive PSI in almost any industry, trade or profession, e.g., as a financial professional, IT consultant, construction worker or medical practitioner.

Taxpayers who earn PSI while running a business (e.g., as a contractor) need to work out if they were a personal services business (‘PSB’) in the year that they received the PSI, as this will affect the deductions they can claim.

Taxpayers can self-assess as being a PSB if they:

• meet the ‘results test’ for at least 75% of their PSI, or
• meet one of the other PSB tests (i.e., the unrelated clients test, the employment test, or the business premises test), and less than 80% of their PSI is from the same entity and its associates.

Taxpayers who self-assess as a PSB still need to report their PSI in their income tax return and keep certain records.

SMSFs must report certain events that affect any member’s transfer balance account (‘TBA’) quarterly using transfer balance account reporting (‘TBAR’).  These events must be reported even if the member’s total superannuation balance is less than $1 million.

SMSF trustees must report and lodge within 28 days after the end of the quarter in which the event occurs, although they are not required to lodge if no TBA event occurred during the quarter.

For example, if an SMSF had a TBA event in the quarter ending 31 March 2024, the trustee of the SMSF must lodge a TBAR by 28 April 2024.

If an SMSF does not lodge a TBAR by the required date, the member’s TBA may be adversely affected.  The member may need to commute any amounts in excess of their transfer balance cap and pay more in excess transfer balance tax.

Editor: If you need assistance in relation to any of these issues, please contact our office.

Taxpayers who have been working from home this financial year, and who consequently incurred work-related expenses, have two ways to calculate their work from home deduction:

• the actual cost method; or
• the fixed rate method.

Using the fixed rate method, taxpayers can claim a rate of 67 cents per hour worked at home.

This amount covers additional running expenses, including electricity and gas, phone and internet usage, stationery, and computer consumables.  A deduction for these costs cannot be claimed elsewhere in their tax return, although taxpayers can separately claim any depreciating assets, such as office furniture or technology.

Taxpayers need to have the right records, and the record-keeping requirements differ for the fixed rate method and the actual cost method.

Editor: If you need more information regarding making these claims, please contact our office.

The big news story for those contributing to super is that the contribution caps are set to increase from the 2025 income year.

• The concessional contribution cap will increase from $27,500 to $30,000.
• This ‘CC’ cap is broadly applicable to employer super guarantee contributions, personal deductible contributions and salary sacrificed contributions.
• The non-concessional contribution cap will increase from $110,000 to $120,000.
• This ‘NCC’ cap is generally applicable to personal non-deductible contributions.

The increase in the NCC cap also means that the maximum available under the three-year bring forward provisions will increase from $330,000 to $360,000.  This is provided that the ‘bring forward’ is triggered on or after 1 July 2024.

The ‘total superannuation balance’ threshold for being able to make  non-concessional contributions (and the pension general transfer balance cap) will remain at $1.9 million.

Businesses that pay contractors to provide certain services may need to lodge a Taxable Payments Annual Report (TPAR) by 28 August each year.

From 22 March, the ATO will apply penalties to businesses that:

• have not lodged their TPAR from 2023 or previous income years;
• have received three reminder letters about their overdue TPAR.

Taxpayers that do not need to lodge a TPAR can submit a ‘non-lodgment advice form’.  Taxpayers that no longer pay contractors can also use this form to indicate that they will not need to lodge a TPAR in the future.

The ATO has recently issued a reminder that small business owners may be eligible for concessions on the amount of tax they ultimately pay.

This depends on their business structure, their industry and their aggregated annual turnover.

For example, small business owners who have an aggregated annual turnover of less than:

•       $2 million can access the small business CGT concessions;
•       $5 million can access the small business income tax offset; and
•       $10 million can access the small business restructure roll-over.

The ATO expects small business owners to check their eligibility each year before they apply for any of these concessions.

Furthermore, taxpayers generally need to keep records for five years to prove any claims they make.

Editor: We are always on the look-out for what tax concessions may be of use to our clients based on their individual circumstances.  These small business concessions in particular, can be very beneficial when applicable. 

The ATO has advised employers that ‘FBT time’ is just around the corner, and they need to stay on top of their fringe benefits tax (FBT) obligations.

Employers need to ensure they have attended to the following matters this FBT time:

• Identify if they have an FBT liability regarding fringe benefits they have provided to their employees or their associates between 1 April 2023 and 31 March 2024.
• Identify if they have an FBT liability as they will need to lodge an FBT return and pay the amount due by 21 May.
• Identify if they are currently registered for FBT and let the ATO know if they do not need to lodge an FBT return (Editor: by asking us to lodge an FBT non-lodgment notice) to prevent the ATO seeking a return from them at a later date.
• Employers should also remember that when the new FBT year starts on 1 April, they can choose to use existing records instead of travel diaries and declarations for some fringe benefits.

Furthermore, the ATO has released PCG 2024/2 which provides a short cut method to help work out the cost of charging electric vehicles (‘EV’) at an employee’s home for FBT purposes.

Eligible employers can choose to use either the EV home charging rate of 4.2 cents per kilometre or the actual cost.

Ultimately, all employers need to make sure they understand their FBT obligations and the records they need to keep to avoid an FBT liability.