Simeoni Christmas Newsletter
08th Dec 2022INTRODUCTION
With another year almost over, it once again makes us reflect on the year that has just passed and be thankful for the things that are important in our lives. We are thankful that 2022 has returned to relative normality after 2 years of Covid-19 restrictions and lockdowns.
Most of our clients have rebounded well from the slowdown over the past years, with the main issues most clients are experiencing relating to labour difficulties and increasing costs. With inflation hitting a 30 year high and the RBA increasing interest rates, with more to come in 2023, it will be a challenging year ahead. Many clients are reviewing their strategies to accommodate the challenging environment expected, which may include reducing debt, costs and looking out for good investment opportunities.
We at Simeoni are grateful for the continued support of our wonderful clients, who make working each day enjoyable. We have felt a lot of your pain over the past years and enjoyed the many victories/success since and are more determined to improve our services in 2023 to continue this journey. Let’s hope that it won’t be as challenging as predicted.
Finally, I would like to thank our wonderful staff at Simeoni who have over the past years risen to the challenges of the time. Their dedication, loyalty, hard work and going beyond the call of duty have helped us assist our clients in their time of need, while meeting all deadlines. Coming to work each day is so much more enjoyable with a fantastic group of people. Thank you so much.
We hope you enjoy this Christmas newsletter, which includes my Fearless Predictions for 2023 and some interesting information on Electric Vehicle tax concessions.
We at Simeoni want to wish you a wonderful Christmas and a prosperous New Year.
PAUL’S FEARLESS PREDICTIONS
Due to restrictions and deadline pressures last year I was not able to make my predictions for 2022.
My 2023 predictions are as follows:
- RBA interest rates will hit at least 4%.
- Unemployment in Australia will reach over 5%.
- USA economy will go into recession during 2023, while Australia will just miss a technical recession.
- The Australian Dollar will reach over $0.75 to the USD.
- Australian property prices to decrease by at least 10%.
- During the second half of 2023 the Reserve Bank will commence decreasing interest rates to avoid a recession.
- Penrith Panthers will win their 3rd NRL premierships in a row.
- NSW Blues to regain the Rugby League State of Origin trophy.
- Ukraine and Russia will sign a peace agreement to cease conflict.
- Capital cities around Australia will experience multiple electrical blackouts.
The Australian Government Green (?) FBT exemption for electric cars Christmas Gift.
Legislation has recently been passed to change the FBT treatment of certain electric cars, with the aim of increasing the take up of electric cars in Australia.
The Treasury Laws Amendment (Electric Car Discount) Bill 2022 was introduced to Parliament on 27 July 2022 and provides for an FBT exemption for cars that are classified as zero or low emission vehicles and are provided by an employer to an employee as a car fringe benefit. The Bill was passed by Parliament on 28 November 2022.
The Government is hoping that this measure will help fuel demand for electric vehicles, although the fact that the concession is provided in the form of an FBT exemption limits the scope of the concession somewhat. For example, the concession won’t really help sole traders or partners in a partnership unless they provide cars to other employees as a fringe benefit. When it comes to beneficiaries of a trust and shareholders of a company it will be important to determine whether the benefit will be provided to them in their capacity as an employee or director of the entity.
The exemption is intended to apply to benefits provided from 1 July 2022, but won’t generally be available to cars that were already owned on this date. In order to qualify for the exemption the car needs to be first held and used on or after 1 July 2022. If a car was ordered before 1 July 2022 but was not delivered until after 1 July 2022 it could still be eligible for the exemption. However, a car delivered to the employer prior to 1 July 2022 would not generally qualify. A second-hand electric car may qualify for the exemption, provided that the car was first purchased new on or after 1 July 2022.
An example of the above restrictions
If Zena acquires an electric car on 1 April 2022 and makes that car available for the private use of her employee Jack, to provide car fringe benefits from that date for 4 years, the benefits provided from 1 July 2022 will not be exempt.
Additionally, if Zena were to instead sell the car to another employer after Jack had used it for only 2 years (i.e. on 1 April 2024), the benefit that employer may provide to its employees for the use of the electric car will also not be exempt.
In order to qualify for the exemption the vehicle needs to be classified as a car (ie, designed to carry a load of less than 1 tonne and fewer than 9 passengers). It also needs to be classified as a zero or low emissions vehicle, which would typically include:
- Battery electric vehicles;
- Hydrogen fuel cell electric vehicles; and
- Plug-in hybrid electric vehicles.
Be careful because this doesn’t include all hybrid vehicles. To qualify the car needs to be a ‘plug-in’. A car that has an internal combustion engine will not meet requirements unless it is able to be “fuelled” by a battery that can be recharged by an off-vehicle power source.
Also, amendments were made to the Bill to ensure that the exemption for plug-in hybrid electric vehicles will only apply for a limited period of time. This aspect of the rules is due to expire on 31 March 2025.
The value of the car at the first retail sale must be below the luxury car tax threshold for fuel efficient vehicles ($84,916 in 2022-23).
If an electric car qualifies for the FBT exemption, then associated benefits relating to running the car for the period the car fringe benefit is provided can also be exempt from FBT.
Government modelling states that if an electric vehicle valued at about $50,000 is provided by an employer through this arrangement, the FBT exemption would save the employer up to $9,000 a year. For individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4,700 a year.
While the measure provides an exemption from FBT, the value of that fringe benefit is still taken into account in determining the reportable fringe benefits amount of the employee. That is, the value of the benefit is reported on the employee’s income statement. While income tax is not paid on this amount, it is used to determine the employee’s adjusted taxable income for a range of areas such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments.
Quote Of The Month
“It is not the failure of others to appreciate your abilities that should trouble you, but rather your failure to appreciate theirs.”
– Confucius
