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FBT - ATO Attacks Work Vehicles

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Work Van

The ATO has recently revised its guidance on how fringe benefits tax (“FBT”) applies in relation to the private usage of work vehicles.

Previously the ATO issued a definitive list of eligible work-use vehicles (typically tradie, dual cab and panel vans etc), but from 1 April 2017 this list has been withdrawn and employers now have to self-assess.

In the past this law has always been about minor, infrequent travel for work vehicles, but this new ATO guidance puts the onus very much on the employer to prove that work cars are not used just as a perk to retain and attract staff. The ATO’s guidelines now suggest that a vehicle’s private use cannot exceed 1,000km in a year, and no return journey can exceed 200km. This is thought to be much more restrictive than previously understood.

While home to work travel is generally not considered private for these work vehicles, according to these new guidelines, any trip in which a home to work route varies by more than 2km will be considered a personal trip.

This new approach will potentially catch many employers unaware as they have in the past assumed that “work vehicles” (ie on the eligible vehicles list), means no FBT.

Our advice to clients who provide these work vehicles to employees is to make sure you have a policy on work-related vehicles and make sure you can monitor how it is enforced.

Casual Workers - Leave Entitlements

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Casual Worker

Casual workers aren’t normally entitled to be paid for any leave entitlements such as annual leave or long service leave. Their hourly pay rates and other employment conditions generally reflect this fact.

The Federal Court has recently handed down a decision however to grant a casual worker annual leave entitlements. The decision follows The Fair Work Commission deciding to incorporate a ‘model casual conversion’ clause into 85 modern awards, including in the retail, restaurant, banking, aged-care, agriculture, airline, mining, maritime and transport industries. Some commentators are suggesting that this judgment could see a mass conversion of casual workers into permanent employees. Potentially those workers would automatically be entitled to annual leave and sick pay for each year of service, along with various other benefits. In a similar case earlier this year in the Federal Circuit Court a casual worker won a claim for 15 years worth of annual leave entitlements! That case was about a dispute as to whether or not the worker was employed as a casual or a permanent employee.

These decisions should motivate business owners to carefully examine all applicable modern awards that may apply to their staff, particularly where long term, casual type staff are employed. Employers should check all applicable modern awards for their staff to identify whether a 'model casual conversion' clause has been written in and what the term is for casual employment to be considered for conversion to permanency.

Employers could face claims from workers for entitlements reserved for permanent employees, such as claims for annual leave, personal leave and for payment of a notice period on termination as well. Workers who are employed under a casual employment contract and who have been sick may have a right to claim for sick leave taken in the past.

The Court also added that an employee's status may change during the course of an employment. What is agreed to at the commencement of employment is relevant to the characterisation process (ie casual v’s permanent), but employment which commences as casual employment may become permanent full-time or permanent part-time because its characteristics change to reflect those of an on-going part-time or full-time employment.

The Federal Court decision could also see organisations targeted for punitive fines for being in breach of the Fair Work Act. The Federal Court has ordered a hearing to decide what pecuniary penalties should be imposed on the company involved for failure to meet its Fair Work obligations.

In the future employers may want to consider more carefully why they employ casual staff. Typically, employing casuals on a long-term basis is far more expensive than employing a permanent employee and these recent cases cast a new uncertainty over entitlements for casual employees.

If in doubt concerning these matters please contact your StewartBrown Partner or Manager. If you have significant numbers of casual staff in your business you might also seek advice from a lawyer specialising in employment law.

StewartBrown - Aged Care Workforce Strategy Taskforce Submission (June 2018)

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StewartBrown was invited to make a submission to the Aged Care Workforce Strategy Taskforce by the Chairman, Professor John Pollaers. The Submission includes: a summary of benchmarking survey results, commentary on the industry and an organisational analysis.

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March 2018 Aged Care Sector Reports Released

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The StewartBrown March 2018 Aged Care Financial Performance Survey (ACFPS) incorporates detailed financial and supporting data from over 911 residential aged care facilities and over 21,700 home care packages (412 home care programs) across Australia. The quarterly survey is the largest benchmark within the aged care sector and provides an invaluable insight into the trends and drivers of financial performance at the sector level and at the facility or program level.

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StewartBrown Submission to Senate Inquiry into Financial and Tax Practices of For-Profit aged care Providers

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On 10 May 2018 the Australian Senate referred an Inquiry titled “the financial and tax practices of for‐profit  aged care providers” to the Economics References Committee, with a report due by 14 August 2018.   In particular, the Inquiry is to cover: 

  1. the use of any tax avoidance or aggressive tax minimisation strategies; 
  2. the associated impacts on the quality of service delivery, the sustainability of the sector, or value for  money for government; 
  3. the adequacy of accountability and probity mechanisms for the expenditure of taxpayer money; 
  4. whether current practices meet public expectations; and 
  5. any other related matters.

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