When a retail store employer provides an employee with a voucher/coupon, entitling the employee to merchandise form a participating retail store of the employer, the employer has not yet provided the employee with an ‘in-house property fringe benefit’.

Facts
The employer operates retail stores and provides the employee with a voucher/coupon at regular intervals during the year.

The voucher/coupon arrangement has the following characteristics:
• no monetary value is specified, nor loaded, onto it;
• it can be redeemed at participating stores operated b the employer;
• it can be redeemed for a specified type of merchandise up to a
specified number of items for a certain time after its issue date;
• if it is not redeemed by the expiry date; it will be forfeited;
• the employee does not pay for it nor for the merchandise;
• each one is individually numbered and the number is
recorded as being provided to that particular employee;
• each one is surrendered upon redemption and
the redeemed voucher number is recorded in the employer’s sales system;
• it is reconciled against the identity of the employee
before the merchandise can be obtained; and
• the merchandise is exactly the same as that sold to the general public.

Reasons for Decision
Where the employer has provided an employee with a voucher/coupon, which the employee can redeem for merchandise from a participating retail store of the employer, the employer provides the employee with an ‘in-house property fringe benefit’ when the employee redeems the voucher/coupon for the merchandise, not when it is issued.

Net Medical Expenses Tax Offset Phase-out
The net medical expenses tax offset is being phased out from 1 July 2013.
To be eligible for the offset this year, your clients must have received the offset in their 2012–13 income tax assessment. Similarly, those who receive the tax offset in their 2013–14 income tax assessment will continue to be eligible for the offset in 2014–15. That is the final year the offset can be claimed.
This does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care. Those expenses can be claimed until 30 June 2019.

Instant asset write-off and simplified depreciation
As part of its 2013 election commitments, the government announced it would repeal the provision allowing small businesses an accelerated initial deduction for motor vehicles.
Small businesses can currently claim up to $5,000 as an immediate deduction for motor vehicles costing $6,500 or more that were acquired from the 2012-13 income year onwards. The remaining value is depreciated in the general small business pool at a rate of 15% in the first year and then at 30% a year thereafter.
(If the vehicle costs less than $6,500, the whole amount can be claimed as an immediate deduction under the instant asset write-off provisions)
If the proposed changes are enacted, motor vehicles will only be immediately deductible if they cost less than $1,000. Motor vehicles costing $1,000 or more, acquired and available for use after 31 December 2013 will need to be depreciated in the general small business pool.
Motor vehicles acquired and available for use between 1 July 2013 and 31 December 2013 will still be eligible for an immediate deduction of up to $5,000.

Be prepared for new penalty powers
On 14 December 2013 the government announced that it will proceed with law changes that give the ATO greater powers in dealing with SMSF trustees who breach super law.
It is proposed that these new powers will apply to contraventions occurring from 1 July 2014 and cover:
• administrative penalties
• education directions
• rectification directions.
They will also apply to contraventions that were made prior to 1 July 2014 and continue after that date.
For example, if your fund has lent money to a member or relative and the loan still exists on or after 1 July 2014 you will be liable for a penalty. The loan should immediately be repaid to the fund with appropriate commercial interest.
Under the proposed measures, penalties will vary according to the type of breach. In the example above, each individual trustee will be personally liable for a penalty of $10,200.
For an SMSF with a corporate trustee each director will be jointly and severally liable for a penalty of $10,200.
The penalty cannot be paid using the resources of the SMSF and doing so would be considered a serious breach likely subject to more significant penalties from the ATO.
Under the proposed administrative penalties the ATO must impose the penalty when we become aware of a relevant breach from 1 July 2014. To avoid these penalties make sure your SMSF is fully compliant with the super laws so that you don’t become liable for a penalty or other sanctions.
If trustees are making progress in resolving contravention(s) by 1 July 2014 the ATO would consider these circumstances in any request to remit any imposed administrative penalties.

Dividend Washing

Dividend washing occurs when shareholders seek to claim two sets of franking credits on what is effectively the same parcel of shares.
The Proposed new integrity rule is intended to:
apply from 1 July 2013
• be inserted into the Income Tax Assessment Act 1997
• be activated to the extent that an entity, or an associate of an entity, disposes of the membership interest without the right to the dividend (ex-dividend) and then acquires a substantially identical membership interest with the right to the dividend (cum-dividend)
• ensure, when activated, that the entity would not entitled to the additional franking credit tax offset on the distribution on the membership interest acquired with the right to the dividend, and the amount of the franking credit on that distribution would not be included in the assessable income of the entity
• not affect typical small retail investors, because it will only apply to investors who have franking credit tax offset entitlements in excess of $5,000.

CGT Discount For Foreign Resident Individuals

The CGT discount, previously known as the CGT 50% discount, was available to foreign resident individuals on taxable Australian property.
In the 2012–13 Budget, the government announced changes to the application of the CGT discount. These changes became law on 29 June 2013.
From 8 May 2012, foreign or temporary resident individuals must meet certain eligibility conditions to apply the CGT discount.
For CGT events occurring after 8 May 2012, the application of a CGT discount percentage will depend on:
whether the CGT asset was held before or after 8 May 2012, and
the residency status of the individual who has the capital gain.
This change affects individuals (including a beneficiary of a trust and a partner in a partnership), who are:
a foreign or temporary resident
an Australian resident with a period of foreign residency after that date
had a discount capital gain from a CGT event that occurred after 8 May 2012.
If you are unsure about your residency status, you can use our Determination of residency tool.
You are not affected by this change if the CGT event occurred before 8 May 2012.

The Changes Affect Foreign Or Temporary Residents

You must calculate the CGT discount you can apply to the capital gain if you are a foreign or temporary resident individual and, after 8 May 2012, you have a discount capital gain from a CGT event.
If you were a foreign or temporary resident on 8 May 2012, you may choose to get a market value for the CGT asset as at 8 May 2012 and use a market value calculation. This will apportion the CGT discount to take into account the capital gain you have that was accrued before 8 May 2012.
You must calculate the CGT discount you can apply to the capital gain you have if you are an Australian resident and, after 8 May 2012, you have:
• a capital gain from a CGT event, and
• a period of foreign or temporary residency.
The period of foreign or temporary residency after 8 May 2012 is taken into account when calculating the CGT discount you can apply to your capital gain.

Private Health Insurance Rebate Changes

There are changes to the way the private health insurance rebate (PHI) is calculated and applied to premiums.
Rebate adjustment
From 1 April 2014, rebate percentages are adjusted annually by a rebate adjustment factor. The rebate adjustment factor averages the increase in the consumer price index and the premium price increase from insurers. It is calculated by the Department of Health each year.
The adjusted rebate percentages are applied to premiums paid on or after 1 April. This means client’s rebate before 1 April will be different to the rebate on or after 1 April.

Lifetime health cover loading

From 1 July 2013, the rebate will be calculated on the premium minus any Lifetime Health Cover (LHC) loading. LHC loading is a penalty that applies to individuals who have not taken out and maintained PHI from the year they turned 31.
This means the private health insurance rebate may be calculated on an amount which is less than the total cost of the policy, reducing the amount of rebate your client is eligible to receive.
These changes will be automatically applied to the policy and clients don’t need to do anything.