The latest NSW Government Budget included a ground breaking new policy to offer first home buyers the choice to pay a one-off lump sum tax (‘stamp duty’) or an annual land tax when purchasing homes under a certain value.

What do the changes to stamp duty mean for first home buyers?

From Monday 16 January 2023, many looking to buy their first home will have the choice of paying stamp duty (an up-front, one-off lump sum) or an annual land tax.

The land tax would be at the rate of $400 per year, plus 0.3 per cent of the land value, annually. This choice will be available to first-home-owners purchasing a property under $1.5 million with the aim of assisting buyers to access the property market quicker.

From 16 January 2023, eligible first home buyers who opt into the First Home Buyer Choice will not pay stamp duty on their purchase. The property will not be locked into the scheme if it is sold.

First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.

Will other states follow suit?

It is possible other states may follow a similar trend of replacing stamp duty with land tax, partly due to stamp duty being an extraordinarily bad tax which goes against basic taxation principles.

The Australian Capital Territory has already implemented similar changes. Land tax is being phased in over 20 years, so homeowners are not caught paying two lots of tax.

Remember, you can reach out to your Halletts adviser anytime if you have questions in relation to your or your family members who are looking to purchase their first home.

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On 27 July 2022, the Government introduced the Treasury Laws Amendment (Electric Car Discount) Bill 2022 into Parliament.

This Bill implements the Government’s plan to remove fringe benefits tax (FBT) to make electric cars (aka ZEVs – Zero and Low Emission Vehicles) cheaper so that more families who want them can afford them.

The legislation will amend the Fringe Benefits Tax Assessment Act 1986 to exempt from FBT the use of eligible ZEVs made available by employers to employees.

This FBT exemption will apply to battery electric cars, hydrogen fuel cell electric cars and plug‑in hybrid electric cars. (Sorry Toyota Hybrid owners!)

The exemption will be available for eligible electric cars with a first retail price below the luxury car tax threshold for fuel efficient cars ($84,916 for 2022‑23) first made available for use on or after 1 July 2022.

Interestingly, car benefits that are exempt from FBT under this exemption will continue to be included in an employee’s individual fringe benefits amounts for the purpose of determining the employee’s reportable fringe benefits amount (RFBA). This is achieved by proposing to amend section 135P of the FBTAA. This is the first time a specific measure has been introduced to treat an exempt benefit as still being a reportable fringe benefit. Presumably, this is aimed at preventing ZEVs from being used to reduce income-tested benefits and payments.

We eagerly await the draft Bill’s receipt of Royal Assent and will let you know when the legislation FBTAA has passed.

Remember, you can reach out to your Halletts adviser anytime if you have questions in relation to the purchase or salary packaging of your Electric Vehicle.

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Key responsibilities of company directors

When you make a business decision as a company director, you must, amongst other things, ensure that you:

    • make the decision in good faith and for a proper purpose
    • do not have a material personal interest in the decision and make it in the best interests of the company
    • find out and assess how any decision will affect your company’s business performance, especially if it involves a lot of the company’s money or could have a material impact on the company’s reputation
    • keep informed about your company’s financial position and performance, ensuring your company can pay its debts on time
    • get trusted professional advice when you need assistance to make an informed decision
    • make full and frank disclosure about any material personal interests you do have

Management of Company assets, debts, employees, and investments

As a company director it is important you understand that:

    • the company owns the assets so you cannot treat company property, assets or funds, as if they are your own.
    • the company is generally responsible for paying debts incurred by the company, which may include trade creditors, employees and statutory bodies such as the Australian Taxation Office. If there are grounds for suspecting that the company is insolvent, you must not trade, incur debt, or continue to conduct business as usual. Instead, you should immediately seek trusted professional business advice.
    • any money invested in the company (e.g. through loans to the company or by owners or investors buying shares in the company) belongs to the company and must be used for a proper company purpose.
    • the owners or shareholders of the company are entitled to take a dividend payment (e.g. money) from the company, but only after the company has ensured it has the ability to pay its debts owing to trade creditors and other types of creditors who have lent money to the company, employees and statutory authorities.
    • while a company is usually responsible for paying its debts, a director may become personally liable. This generally occurs when a director breaches their legal obligations (e.g. the company continues to trade while it is insolvent).

If your company has employees, you should find out if there are any Pay As You Go (PAYG) withholding or Superannuation Guarantee Charge (SGC) amounts owed to the Australian Taxation Office (ATO) by the company.

If you fail to meet a PAYG withholding or SGC liability by the due date, you may become personally liable for a penalty equal to the unpaid amount under the ATO’s Director Penalty Regime.

Remember, you can reach out to your Halletts adviser anytime if you have questions in relation to being a company director.

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