Employers that provide employees with the use of eligible electric vehicles (EVs) can potentially qualify for an FBT exemption. This should normally be the case where:
The car is a zero or low emission vehicle (battery electric, hydrogen fuel cell or plug-in hybrid electric);
The car is both first held and used on or after 1 July 2022; and
The value of the car is below the luxury car tax threshold for fuel efficient vehicles (which is $89,332 for 2024-25 financial year).
Plug-in hybrid vehicles no longer FBT exempt
From 1 April 2025, plug-in hybrid electric vehicles will no longer qualify for the FBT exemption unless:
The use of the vehicle was exempt before 1 April 2025, and
There is a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025.
If there is a break or change to that commitment on or after 1 April 2025 then the exemption might not continue to be available.
Working with the exemption
Even if the FBT exemption applies, your business will still need to work out the taxable value of the benefit as if the FBT exemption didn’t apply. This is because the value of the exempt benefit is still taken into account when calculating the reportable fringe benefits amount of the employee. While income tax is not paid on this amount, it can impact the employee in a range of areas (such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments).
This means the employee’s own home electricity costs incurred on charging the electric vehicle will often need to be worked out. This figure can generally be treated as an employee contribution to reduce the value of the benefit.
While this can be practically difficult to determine, the ATO has issued some guidelines that provide a 4.20 cent per km shortcut rate that can potentially help with the calculation. These guidelines do not apply to plug-in hybrid vehicles.
Many electric vehicles are also packaged together with electric charging stations. Just be aware that the FBT exemption for electric cars does not extend to charging stations provided at the employee’s home
Providing equipment to work from home
Many businesses continue to offer flexible work from home arrangements. To assist, employees are often provided with work-related items to assist them to work from home. In general, where work related items are provided to employees and used primarily for work, FBT shouldn’t apply.
For example, portable electric devices such as laptops and mobile phones provided to employees shouldn’t trigger an FBT liability as long they are primarily used by your employees for work. Multiple similar items can also be provided during the FBT year where required – for example multiple laptops have been provided to the employee – but only of the business has an aggregated turnover of less than $50m (previously, this threshold was less than $10m).
If the employee is using equipment provided by the business for their own private use, normally FBT would apply to the private use. However, the FBT liability can be reduced based on the business use percentage.
Does FBT apply to your contractors?
The FBT rules tend to apply when benefits are provided to employees and certain office holders, such as directors. FBT should not apply when benefits are provided to genuine independent contractors but, you need to be sure that your contractors are in fact contractors.
Are your contractors really contractors?
Following two landmark decisions handed down by the High Court, the ATO has now finalised a ruling TR 2023/4 that helps determine whether a worker is an employee or an independent contractor.
If the parties have entered into a written contract, then you need to focus on the terms of that contract to establish the nature of the relationship (rather than looking at the conduct of the parties). However, merely labelling a worker as an independent contractor doesn’t necessarily mean that they won’t be treated as an employee if the terms of the contract suggest that the parties have entered into an employment relationship.
The ATO has also issued PCG 2023/2 that sets out four risk categories. Arrangements will tend to be viewed in a more favourable light where:
There is evidence to show that you and the worker have agreed on the classification;
There is a comprehensive written agreement that governs the relationship;
There is evidence that you and the worker understand the consequences of the classification;
The performance of the arrangement hasn’t deviated significantly from the terms of the contract;
Specific advice has been sought confirming that the classification is correct; and
Tax, superannuation, and reporting obligations have been met when the worker is classified as an employee or independent contractor (whichever relevant).
If your business employs contractors, you should have a process in place to ensure the correct classification of the arrangements and to determine the ATO’s risk rating. These arrangements should also be reviewed over time.
Even when a worker is a genuine independent contractor, just remember that this doesn’t necessarily mean that the business won’t have at least some employment-like obligations to meet. For example, some contractors are deemed to be employees for superannuation guarantee and payroll tax purposes.
The top FBT risk areas
Mismatched claims for entertainment – claimed as a deduction but no FBT
One of the easiest ways for the ATO to pick up on problem areas is where there are mismatches.
When it comes to entertainment, employers are often keen to claim a deduction but this can be a problem if it is not recognised as a fringe benefit provided to employees. Expenses related to entertainment such as a meal in a restaurant are generally not deductible and no GST credits can be claimed unless the expenses are subject to FBT.
Let’s say you taken a client out to lunch and the amount per head is less than $300. If your business uses the ‘actual’ method for FBT purposes, then there should not be any FBT implications. This is because benefits provided to client are not subject to FBT and minor benefits (i.e., value of less than $300) provided to employees on an infrequent and irregular basis are generally exempt from FBT. However, no deductions should be claimed for the entertainment and no GST credits would normally be available either.
If the business uses the 50/50 method, then 50% of the meal entertainment expenses would be subject to FBT (the minor benefits exemption would not apply). As a result, 50% of the expenses would be deductible and the business would be able to claim 50% of the GST credits.
Employee contributions by journal entry in the accounts
Many businesses use after-tax employee contributions to reduce the value of fringe benefits. It is also reasonably common for these contributions to be made by journal entry through the accounting system only (rather than being paid in cash).
While this can be acceptable if managed correctly, the ATO has flagged numerous concerns including whether journal entries made after the end of the FBT year are valid employee contributions.
For an employee contribution made by way of journal entry to be effective in reducing the taxable value of a benefit, all of the following conditions must be met:
The employee must have an obligation to make a contribution to the employer towards a fringe benefit (i.e., under the employee’s remuneration agreement);
The employer has an obligation to make a payment to the employee. For example, the parties may agree that the employer will lend an amount to the employee or the employee might be entitled to a bonus that hasn’t been paid yet. If a loan is made by the employer then this could trigger further tax issues that need to be managed;
The employee and employer agree to set-off the employee’s obligation to the employer against the employer’s obligation to the employee; and
The journal entries are made no later than the time the financial accounts are prepared for the current year (i.e., for income tax purposes).
Failing to ensure that arrangements involving fringe benefits and employee contributions are clearly documented can lead to problems. For example, the ATO may ask to see evidence of the fact that the employer is actually under an obligation to make contributions towards a fringe benefit. If there is no evidence, then significant FBT liabilities could arise.
Not lodging or Late FBT returns
The ATO is concerned that some employers are not lodging FBT returns when required to.
If your business employs staff (even closely held staff such as family members), and is not registered for FBT, it’s essential to ensure that the position is reviewed to check whether the business could potentially have an FBT liability.
If the business provides cars, car spaces, reimburses private (not business) expenses, provides entertainment (food and drink), employee discounts etc., then you are likely to be providing at least some fringe benefits.
There is a list of benefits that are considered exempt from FBT, such as portable electronic devices like laptops, protective clothing, tools of trade etc. If your business only provides these exempt items, or items that are infrequent and valued under $300, then you are unlikely to have to worry about FBT.
Make sure you have reviewed the FBT client questionnaire we sent you!
FBT Housekeeping & Reducing the FBT record keeping burden
Record keeping for FBT purposes can be onerous. From 1 July 2024 however, your business will have a choice to keep the existing FBT record keeping methods, use existing business records where those records meet the requirements set out by the legislative instrument, or a combination of both methods:
Temporary accommodation relating to relocation declaration – See LI 2024/8
FBT housekeeping
It can be difficult to ensure the required records are maintained in relation to fringe benefits – especially as this may depend on employees producing records at a certain time. If your business has cars and you need to record odometer readings at the first and last days of the FBT year (31 March and 1 April), remember to have your team take a photo on their phone and email it through to a central contact person – it will save running around to every car, or missing records where employees forget.
A Costly Mistake: The Rise of Payment Redirection Scams
Scammers are getting smarter, and businesses are paying the price. Payment redirection scams cost Australian businesses millions every year. In 2022 alone, payment redirection scams cost Australian businesses $224 million, with small and micro-business losses increasing by 95% from the previous year. A recent Western Australian court ruling has made one thing clear—businesses must take proactive steps to protect themselves, or they could bear the financial burden of fraud.
What Is a Payment Redirection Scam?
Payment redirection scams occur when cybercriminals intercept invoices or payment details and trick businesses into sending money to fraudulent accounts. These scams typically involve compromised emails, impersonation, and subtle changes to payment details. Scammers often gain access through business email compromise, where they infiltrate or spoof legitimate email accounts to deceive recipients. Once the money is transferred, it often vanishes overseas, making recovery nearly impossible.
Court Ruling: A Wake-Up Call for Businesses
In a landmark case, a Western Australian court ruled that businesses must verify payment details before making transactions. A contractor was scammed out of $190,000 after fraudsters gained access to their email system and provided false bank details to a client. Despite some attempts at verification, the court found that the business did not do enough to prevent the fraud. This ruling sets a precedent—if you fall victim to a payment redirection scam, you may still be liable for the original payment.
How Cybercriminals Gain Access
Scammers use various tactics to infiltrate business systems:
Email Compromise – Hackers gain access to company emails and monitor communications.
Fake Invoices – Fraudsters send invoices with altered bank details.
Urgency Tactics – Scammers pressure businesses to act quickly, reducing the likelihood of verification.
Suspicious Emails – Be cautious with emails containing hyperlinks, urgent payment requests, or demands for sensitive information.
The Golden Rules for Protecting Your Business
Just as gold must be tested for authenticity, every payment request should undergo strict verification. Here are key steps to safeguard your business:
1. Verify Bank Details Before Payments
Never change payment details based on an email alone. Call the supplier using a trusted phone number to confirm any changes. Use secure communication channels for transmitting sensitive financial information.
2. Enable Multi-Factor Authentication (MFA)
A strong lock on your email account is crucial. Use MFA to add an extra layer of security and prevent unauthorised access.
3. Train Your Team to Spot Red Flags
Educate staff on common scam tactics. If an email urges immediate payment or contains subtle changes in account details, treat it as suspicious.
4. Use Pass-Phrases Instead of Passwords
A simple password is like a cheap lock—it won’t keep criminals out. Use long, unique pass-phrases to strengthen security.
5. Implement Strict Payment Controls
Introduce internal approval processes for high-value transactions. A second level of authorisation can stop scammers in their tracks.
The Role of Banks in Fraud Prevention
Regulators are pushing for Australian banks to introduce a confirmation of payee system, which will help verify recipient details before transactions go through. While this initiative is promising, it has not yet been fully implemented in Australia. Businesses should not rely solely on banks for fraud prevention but must take proactive internal measures to safeguard their financial transactions.
Report Scams to the Authorities
If you suspect a payment redirection scam, report it immediately to the Australian Taxation Office (ATO) and Scamwatch. The ATO provides guidance on how to verify or report a scam, ensuring that other businesses do not fall victim to similar frauds. (Verify or report a scam – ATO)
Protect Your Business Like a Gold Reserve
Gold reserves are guarded with extreme care—your business funds deserve the same level of protection. Cybercriminals are always looking for their next victim, but by staying informed and implementing robust security measures, you can keep your business safe.
Need Help Strengthening Your Cybersecurity?
At DJ Grigg Financial, we help businesses navigate financial risks, including fraud prevention. Contact us today for expert advice on safeguarding your finances.
ATO’s Small Business Focus Areas for 2025: Stay Compliant and Secure Your Business Future
The Australian Taxation Office (ATO) has released its key focus areas for small businesses in 2025. Understanding these priorities can help you avoid costly mistakes and ensure your business stays on the right side of tax compliance.
Why Staying ATO-Compliant is Crucial
Tax compliance isn’t just about ticking boxes—it’s about securing the financial health of your business. Non-compliance can lead to audits, penalties, and even legal action. By understanding the ATO’s latest focus areas, you can take proactive steps to protect your business and financial future.
Key ATO Focus Areas for Small Businesses in 2025
1. Business Income is Not Personal Income
Your business’s money and assets are not personal funds. The ATO is paying close attention to business owners who use company funds for personal expenses without proper documentation.
Common mistakes include:
Using business accounts to pay personal bills without recording them properly.
Taking out loans from the business without following Division 7A rules, which can result in them being treated as dividends by the ATO.
Not declaring interest on business loans to owners.
The ATO provides clear guidance on this issue, which you can review in detail here.
Expert Tip: The ATO states that “Keeping business and personal finances separate isn’t just good practice—it’s essential for compliance.”
2. Claiming Deductions and Concessions Correctly
Small businesses often claim deductions and concessions, but the ATO is watching for errors and misreporting.
Areas under scrutiny:
Incorrect claims for small business CGT concessions.
Overstating deductions for non-commercial business losses.
Claiming expenses that are not business-related.
Incorrect GST registration and reporting, particularly for ride-sourcing and taxi services.
Before claiming, ensure you meet all eligibility criteria. A simple mistake could lead to amended assessments, repayments, and penalties. The ATO provides further information on their Small Business Focus Areas page.
3. Operating Within the Tax System
The ATO is cracking down on businesses that underreport income, over-claim expenses, or engage in risky tax practices.
Behaviours that raise red flags:
Not declaring all cash income.
Poor record-keeping that leads to inaccurate reporting.
Using business funds for personal expenses without proper documentation.
Not lodging returns and paying tax on time.
Employers paying cash wages to avoid tax and superannuation obligations.
If the ATO identifies issues, they may contact you or your tax professional. In severe cases, businesses may face audits, penalties, or legal action. You can learn more about what attracts ATO scrutiny here.
How the ATO Supports Small Business Compliance
The ATO provides several resources to help small businesses meet their obligations, including:
Educational materials and self-paced courses.
Webinars and tailored support programs.
Guidance on voluntary disclosures if errors are identified.
If you receive communication from the ATO, don’t ignore it. Engaging early can help prevent more serious consequences.
Steps to Protect Your Business
If you’re concerned about your tax position, take action now:
Seek Professional Advice – Speak to a registered tax accountant to ensure you’re meeting all ATO requirements.
Correct Mistakes Early – If you identify errors, request an amendment or make a voluntary disclosure to the ATO.
Improve Record-Keeping – Ensure financial records are accurate and up to date.
Report Suspicious Activity – If you suspect tax evasion, report it confidentially to the ATO.
Secure Your Business Future – Talk to Us Today!
Staying compliant with ATO regulations ensures your business remains financially strong and free from penalties. If you need expert guidance, DJ Grigg Financial is here to help. Contact us today for professional tax advice and ensure your business stays on the right track.
Exploring Compassionate Early Release of Super: What You Need to Know
Superannuation is meant to secure your financial future in retirement. However, life’s challenges can sometimes demand immediate solutions. For Australians facing genuine hardship, the compassionate early release of super offers a critical lifeline. This option enables individuals to access their superannuation to address urgent, unavoidable expenses.
In 2023–2024, Australians withdrew a staggering $1.04 billion from their super on compassionate grounds, highlighting its significance. But what exactly does the process involve, and who qualifies? Here’s a detailed guide to help you navigate this potentially life-changing option.
What Is Compassionate Early Release of Super?
The compassionate release of super allows access to your superannuation savings under specific conditions. These funds can help with unpaid expenses when all other avenues have been exhausted. The Australian Taxation Office (ATO) oversees these applications, ensuring they meet strict eligibility criteria.
This scheme covers a range of situations, including:
Preventing the foreclosure or forced sale of your home.
Funding medical treatment or transport for you or your dependants.
Modifying a home or vehicle for severe disability needs.
Covering palliative care costs for terminal illness.
Paying funeral or burial expenses for dependants.
Eligibility for Preventing Foreclosure or Forced Sale of Your Home
One of the most common reasons for early super access is to prevent losing your home. To qualify, you must meet these four key conditions:
The property must be your principal place of residence.
You must be legally responsible for the mortgage repayments or council rates.
Written advice from your lender, council, or enforcement officer must confirm foreclosure or sale is imminent.
You must demonstrate an inability to cover the required amount through other means.
The amount you can withdraw is limited to what’s deemed necessary. Typically, this includes three months of repayments plus 12 months of interest.
How to Apply for Early Release Super on Compassionate Grounds
Contact Your Super Fund First Before applying to the ATO, check with your super fund. They will confirm if your fund allows early release under compassionate grounds and ensure you have enough savings to withdraw.
Gather Required Documents For foreclosure-related claims, this includes legal notices from your lender, proof of residence, and evidence of your financial situation.
Submit Your Application to the ATO Applications are made online through the ATO. Once approved, the ATO will notify your super fund, who will release the funds.
A Financial Lifeline, Not a First Resort
Accessing your super early can provide relief during difficult times, but it comes at a cost. Withdrawals are taxed, and you lose the compounding growth of those savings, potentially impacting your retirement plans. Financial expert Sarah Collins advises, “Superannuation is your safety net for retirement. Exhaust all other options before considering early access.”
In addition, withdrawing super early may affect any insurance cover linked to your super account. Always consult with your super fund to understand these implications.
Why Compassionate Release Matters
The compassionate early release of super offers hope when life throws curveballs. For example:
John, a 45-year-old Melbourne resident, accessed his super to prevent his family home’s foreclosure after job loss. “It was a lifeline I didn’t expect,” John shares. “It saved my home and gave me time to get back on my feet.”
Balancing Short-Term Needs with Long-Term Security
In 2023–2024, the ATO approved over a billion dollars in super withdrawals on compassionate grounds, reflecting the significant demand for this option. However, this isn’t a decision to take lightly. Consider alternative support, like negotiating with creditors, seeking financial counselling, or government assistance, before applying for early release super.
For those who meet the criteria and have no other options, compassionate release can be a financial lifeline. Understanding the process and seeking expert advice ensures you make an informed decision that balances immediate needs with future security.
Take Action Today
If you’re considering early release super on compassionate grounds, start by consulting your super fund and exploring your eligibility. Remember, this option exists to provide crucial support in times of hardship, helping Australians navigate life’s toughest challenges.
Boost Your Super with Salary Sacrifice: Turn Today’s Income into Tomorrow’s Gold
When it comes to building long-term wealth, your superannuation can be a goldmine. Yet many Australians miss opportunities to grow their retirement savings faster and more tax-effectively.
One strategy worth considering is salary sacrifice into super. By directing part of your pre-tax salary into your super fund, you can potentially reduce your tax bill while increasing your retirement nest egg.
With superannuation rules changing from 1 July 2026 and contribution caps increasing, now is the perfect time to review whether salary sacrificing could help you achieve your financial goals.
Key Takeaways
Salary sacrifice allows you to contribute pre-tax income directly into your super fund.
Salary sacrificed super contributions are generally taxed at only 15%, which may be lower than your personal tax rate.
The concessional contributions cap increases to $32,500 from 1 July 2026.
Salary sacrifice contributions can help eligible first-home buyers save through the First Home Super Saver Scheme.
From 1 July 2026, new Payday Super rules will require employers to pay super at the same time as wages.
Starting early can significantly increase your retirement savings through compound growth.
What Is Salary Sacrifice?
Salary sacrifice is an arrangement between you and your employer where you agree to receive less take-home pay in exchange for additional contributions into your super fund.
Instead of receiving all your income as salary and wages, part of your pre-tax income is directed into superannuation.
These payments are known as salary sacrificed super contributions and count towards your concessional contributions cap.
Example:
Suppose your annual salary is $90,000.
You choose to salary sacrifice $5,000 into your super fund.
Rather than paying your marginal tax rate on that income, the contribution is generally taxed at just 15% inside super.
This means more of your money can stay invested and working towards your retirement goals.
Think of it like refining gold. Instead of allowing tax to erode part of your earnings today, you’re preserving more value and placing it into a long-term investment designed to grow over time.
What Are the Benefits of Salary Sacrificing Into Super?
1. Potential Tax Savings
One of the biggest benefits of salary sacrificing into super is the potential tax advantage.
For many employees earning above $45,000 annually, their marginal tax rate is higher than the 15% contributions tax applied to concessional super contributions.
This difference can leave more money invested for your future.
2. Accelerate Your Retirement Savings
The earlier you start contributing extra to super, the more time compound earnings have to work.
Even modest contributions made consistently over decades can create substantial long-term wealth.
3. Reduce Your Taxable Income
Salary sacrificing reduces your assessable income, which may help you:
Lower your overall tax bill
Reduce Medicare Levy exposure
Potentially qualify for certain government concessions or benefits
4. Support Your First Home Purchase
Under the First Home Super Saver Scheme (FHSSS), eligible Australians may be able to access voluntary super contributions to help fund their first home deposit.
Currently, eligible participants can access up to $50,000 of voluntary contributions.
5. Convenient and Automatic
Once established, your employer handles the contributions automatically.
This “set and forget” approach makes building wealth simpler and more disciplined.
New From 1 July 2026: Higher Contribution Caps
A significant superannuation change takes effect from 1 July 2026.
The concessional contributions cap will increase from $30,000 to $32,500 per year.
This cap includes:
Employer Super Guarantee contributions
Salary sacrificed super contributions
Personal deductible super contributions
The increase creates additional opportunities for Australians to boost their retirement savings tax-effectively.
Payday Super: Another Important Change
From 1 July 2026, employers will generally be required to pay Super Guarantee contributions at the same time they pay wages.
The Australian Government estimates this reform could leave a median-income 25-year-old approximately $6,000 better off at retirement through earlier investment of super contributions.
According to ATO Deputy Commissioner Emma Rosenzweig:
“Simply put, Payday Super is about paying super on payday.”
This change is designed to improve transparency, reduce unpaid super, and help Australians grow their retirement savings sooner.
Is Salary Sacrifice Right for Everyone?
Not necessarily.
While salary sacrifice can be highly effective, it’s important to consider your personal circumstances.
You’re comfortable locking funds away until retirement.
You May Need to Be Cautious If:
You’re struggling with day-to-day living costs.
You’re aggressively paying down non-deductible debt.
You need access to your money before retirement.
Your income places you in a lower tax bracket where tax savings may be limited.
Remember that super is generally preserved until retirement or another condition of release is met.
Maintaining an emergency fund outside super remains essential.
Watch Your Contribution Caps
Exceeding your concessional contributions cap can lead to additional tax consequences.
If your total concessional contributions exceed the annual cap, the excess amount may be included in your assessable income and taxed at your marginal rate, less a tax offset.
Higher-income earners should also be aware of Division 293 tax, which may apply when income plus concessional contributions exceed $250,000.
Before making significant contributions, it’s wise to review your contribution history and obtain professional advice.
How to Get Started
If salary sacrifice aligns with your financial goals:
Step 1: Review Your Budget
Determine how much you can comfortably contribute without affecting your lifestyle or financial commitments.
Step 2: Talk to Your Employer
Ask whether they offer salary sacrifice arrangements and complete any required documentation.
Step 3: Monitor Your Contributions
Regularly check your super fund and payslips to ensure contributions are being made correctly.
Step 4: Seek Professional Advice
A tailored strategy can help you maximise benefits while avoiding unintended tax consequences.
Build Your Golden Future Today
Salary sacrifice is one of the simplest and most effective ways to grow your superannuation while potentially reducing tax. With higher contribution caps from 1 July 2026 and the introduction of Payday Super, there has never been a better time to review your retirement strategy.
Like adding another gold coin to your vault each pay cycle, small, consistent contributions can accumulate into substantial wealth over time.
If you’d like to explore whether salary sacrificing into super is right for you, contact the team at DJ Grigg Financial. We’ll help you understand the opportunities, avoid costly mistakes, and develop a strategy tailored to your financial goals.
Disclaimer
This article contains general information only and does not take into account your personal objectives, financial situation or needs. Superannuation and taxation outcomes depend on individual circumstances and may change over time.Before acting on any strategy, consider obtaining personal financial advice and taxation advice relevant to your situation.
