|
Welcome to the December Newsletter.
This month’s quote is:
“It takes the hammer of persistence to drive the nail of success”
Is the Christmas Party Deductible?
With most clients holding some form of Christmas or end of year event, a summary of the (overly complex) rules relating to such events is set out below.
Christmas parties constitute “entertainment benefits” and as such are subject to fringe benefits tax unless specifically exempt or subject to the “minor benefits” exemption. A minor benefit is one that is provided to an employee or associate on an infrequent or irregular basis, and costing less than $100, inclusive of GST, per employee or associate. Holding the Christmas party on the business premises on a working day is
usually the most tax effective.
Expenses such as food and alcohol are exempt from FBT for employees – with no dollar limit, but
no tax deduction or GST credit
can be claimed. However, where the employee’s spouse also attends and the combined cost for employee and spouse is $100 or more, inclusive of GST, there is FBT
only on the spouse’s portion
of food and drink and a tax deduction and GST credit
can be claimed
on that portion.
Where the Christmas party is held on the premises on a working day with only employees and clients attending, and only finger food or a light meal is provided with no alcohol, then the entire cost is
tax deductible
. There is no FBT and a GST credit can be claimed.
Christmas parties held off the premises are exempt from FBT where the cost per head for employees and spouses is less than $100, inclusive of GST, but no tax deduction or GST credit can be claimed. Associates are not counted in the per-head calculation, meaning that the $100 FBT minor benefits exemption applies to the combined cost of employees and their spouses. Therefore, if the combined cost for employees and spouses is $100 or more, GST inclusive, there is FBT on the combined cost, but a tax deduction and GST credit can be claimed on the combined cost.
In all cases, the cost for clients attending the party is not subject to FBT, but no income tax deduction or GST credit can be claimed.
Where the party includes entertainment such as a band or magician that is hired separately to the venue, the FBT minor benefits exemption increases to $125 per employee and/or spouse, inclusive of GST.
Sydney Housing Market Improves
According to information released by the Bureau of Statistics, all Australian capital cities including Sydney recorded positive growth for the first time since June 2004. Rental returns have increased as a result of low vacancy rates and therefore the prospect for capital growth is returning to the marketplace according to the ABS. With Perth’s growth rate hitting almost 46% in the last twelve months, Perth is now the second most expensive city in Australia. If you are contemplating returning to property investment in Sydney, you may wish to discuss the opportunity to access appropriate fixed or variable lending rates and assess the attractiveness and tax effectiveness of such an investment following the reduction in personal tax rates that has occurred in recent years.
Any developer and builder clients may wish to get in touch with your usual contact at the firm to discuss the relevance of this information on your planning for 2007.
Challenges of the Y Generation
Generation Y is generally described as those persons born after 1980. The following statistics may therefore be of interest to any employer as they impact your ability to build a long term labour force within your business. Retention of human resources is a key to business success and therefore these statistics should interest you.
Proportion of Generation Y in the workforce over the next five years – 40%
Proportion of Generation Y employees think it is easy to get another job – 52%
And the most concerning of all:
Proportion of Generation Y who stay less than two years with their employer – 63%!
Building a strategy to retain staff is therefore powerful in building a business that has a competitive edge against your competitors.
|
|
Passive Income vs. Active Income
As you sit down for a family Christmas lunch, one potential topic of conversation for the younger attendees could be the difference between an active income (an income earned from working) vs. passive income (such as income from investments).
If you or your parents were born in the 1940’s, it is likely that the advice given was to find a secure job for life so that you are prepared should another depression arise. In a very different world today, the fundamentals are unchanged. Creating some income for the future out of investment assets funded from today’s active income is the key to financial security and financial independence. Putting aside a little each week into an investment that could produce passive income early on produces enormous results in future years.
A common trap is thinking “I’ll put aside more when I am earning more money”. Essentially the issue is not about how much you earn but instead how much you save or invest. In practice we have seen clients on incomes many times average weekly earnings with no savings.
A financial planner either from our team or elsewhere can assist you and your children in achieving financial independence at a very competitive cost and starting with a minimal amount.
Workers Compensation Rates Fall
A number of clients have experienced reductions with
the level of workers compensation premiums payable with recent renewals. If you have not noticed reductions in your workers compensation insurance costs, you may wish to discuss this matter with us or your insurance broker.
Christmas cards
As clients may know, it is the practice of Macquarie Partners to each year donate to the Salvation Army what would be the cost of sending Christmas cards to clients. We feel that this use of funds to help those in need within our community represents a better use of funds than the sending of Christmas cards. Not withstanding that, Macquarie Partners wishes you and your family a safe and enjoyable holiday period and a very prosperous 2007.
|
