StewartBrown Advisory

StewartBrown Chartered Accounting Firm

Financial

2017 Corporate Administration Survey

We recently conducted the 2017 Corporate Administration Survey and had a response from a large number of aged care providers covering 457 residential care facilities with 35,164 operational places, 12,972 home care clients and 15,395 occupied independent living units. Across the 58 organisations that submitted data, revenues totalled $4.8 billion and aggregated total assets were a total of $15.8 billion.

Aged care enters a pressing cost management phase

It could be said that from the initiation of the new Aged Care Funding Instrument (ACFI) in March of 2008 that the aged care sector was in a ‘revenue phase’ that saw the cumulative Care Income grow to 71% at March 2017 as shown in Figure 1.

FIGURE 1 Cumulative revenue

Now there will be a number of people who may see this figure and suggest that providers have done very nicely out of this growth, but while the revenue grew, so did the costs. For example Care Wages grew more than 75% in the same time period.

During this same period the Care Result (care revenue minus care expenses) grew from $4.40 per bed day in June 2007 to a sector high of $14.92 in September of 2011.

Then the first fiscal cliff appeared as the government looked to reign in the growth of their share of care revenue, so that by June 2013 the Care Result had fallen back to $6.79 per bed day. 

ATO Targeting Work-From-Home Expenses this Tax Time

Working From Home

The Tax Office has earmarked home office expenses as a key focus area this tax time, citing a lack of education contributing to a high amount of mistakes, errors, and questionable claims.

According to the ATO a record $7.9 billion in deductions for ‘other work-related expenses’ were claimed by 6.7 million taxpayers last year, with the Tax Office noticing a rise in expenses related to working from home. With increasing numbers of employees working from home, extra costs related to home office could be deductible, but the ATO advise they are seeing some taxpayers either over-claiming and/or claiming private expenses which are not tax deductible.

They cite increasing evidence that many taxpayers don’t know what they can and cannot claim. In particular, they are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records. While acknowledging that costs incurred as a direct result of working from home can be legitimately claimed, the ATO have noticed taxpayers making claims for all sorts of private expenses.

Apparently a very common issue is people claiming the entire amount of an expense (like their internet or mobile phone), not just the extra part related to their work. An ATO spokesperson advises “If working from home means sitting in front of the TV or at the kitchen table doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space. Employees cannot generally claim occupancy-related expenses like rent, mortgage repayments, property insurance, land taxes and rates.”

The ATO have revealed that over $53 million in errors had been corrected in the first two months of tax time in 2018, stemming from “simple mistakes” such as not declaring all income or over-claiming deductions. If you are unsure about what you might be able to claim please contact our office to discuss further.

Callaghan, Lane, Somerville and Woods to speak at Forum

Fiona Somerville
Fiona Somerville

More speakers have joined our programme at the StewartBrown 2019 Aged Care Finance Forums: Professor Mike Woods of the University of Technology, Sydney; Rachel Lane, author and aged care consultant head of Aged Care Gurus; Mike Callaghan, Chair of the Aged Care Financing Authority; and Fiona Somerville, Director of The Ideal Consultancy, will be joining us and presenting their perspectives on the Aged Care sector. Leaving no capital city out, StewartBrown is holding a forum in each of Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart and Launceston. Speakers will vary slightly from venue to venue, so we will be updating booked attendees by email - and in this space - with complete lists of speakers in each city.

July 2019 Newsletter

WELCOME

Welcome to our July 2019 edition of the StewartBrown newsletter. We hope to keep you informed of the important tax developments and issues affecting businesses in Australia today.

June 2017 Aged Care Sector Reports Released

The StewartBrown Aged Care Financial Performance Survey incorporates detailed financial and supporting data from over 950 residential aged care facilities and 500 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.

June 2018 Aged Care Sector Reports Released

The StewartBrown June 2018 Aged Care Financial Performance Survey (ACFPS) incorporates detailed financial and supporting data from over 974 residential aged care facilities and over 24,952 home care packages 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.

Listed Providers Analysis Report - December 2017

The listed aged care providers Estia, Regis and Japara have recently released their results for the six months to 31 December 2017. StewartBrown has reviewed the Listed Providers Financial Reports and Investor Presentations and a summary of this analysis can be found in the Listed Providers Analysis Report (December 2017).

March 2017 Aged Care Sector Reports Released

The StewartBrown Aged Care Financial Performance Survey incorporates detailed financial and supporting data from over 865 residential aged care facilities and 475 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.

March 2018 Aged Care Sector Reports Released

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.

November 2017 Newsletter

We hope to keep you informed of the important tax developments and issues affecting businesses in Australia today and throughout the year ahead.

Security Alert: BSB & Account Number Changes

Scam Alert

If you are ever asked to change or update a BSB and Account number as a result of an email received from a supplier or known associate, it is critical that you verbally validate this request as well.

Reports to the Australian Competition and Consumer Commission (ACCC) and Australian Cybercrime Online Reporting Network (ACORN) about scams of this sort have exposed over $22.1 million in funds being transferred from businesses to scammer accounts during 2017.

Our top tips to avoid incurring financial loss to scammers are:

  1. Always verbally check the BSB and Account number changes using a trusted phone number. Confirming a change via email is not a secure method of validation.
  2. Scammers often pose as executive staff members to direct employees to make urgent payments. Once again, always verbally validate these requests using a trusted phone number.
  3. If you are unable to contact the requestor, contact the recipient bank to confirm if the BSB and Account number match the name on the account.

For more information on how to protect your business speak to your StewartBrown Partner of Manager and/or contact your bank.

This threat is real and should not be taken lightly! A client of our firm recently experienced this scam and unfortunately lost out financially because of it. Be vigilant and train your staff to be on the alert.

September 2017 Aged Care Sector Reports Released

The StewartBrown Aged Care Financial Performance Survey incorporates detailed financial and supporting data from over 830 residential aged care facilities and 420 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.

Special Newsletter COVID-19 Assistance - New Developments

Welcome to our special update edition of the StewartBrown newsletter where we keep you updated with the latest tax and Government assistance packages being made available in response to the COVID-19 pandemic.

StewartBrown Aged Care Financial Performance September 2020 Survey Sector Report

The StewartBrown September 2020 Aged Care Financial Performance Survey incorporates detailed financial and supporting data from 1,140 aged care homes and 52,534 home care packages across Australia. The Survey, which is performed quarterly, is the largest benchmark in the aged care sector and provides invaluable insight into the trends and drivers of financial performance at the sector level and at the aged care home or programme level.

Click here to download a PDF copy of the September 2020 Aged Care Sector Report.

If you have any queries regarding this report or on any of our audit and assurance or consulting services, please do not hesitate to contact our office on (02) 9412 3033 or call 0429 680 785.

StewartBrown FBT Newsletter

FRINGE BENEFITS TAX ("FBT")

FBT_1

If you or your business have historically been using AUSkey to access Government portal and websites, you will need to make changes before March 2020 as Auskey is being decommissioned. The new replacement service is called myGovID. It will continue to be a secure login that identifies an individual operating on behalf of a business when using Government online services.

The ATO is managing the new myGovID credential exclusively on behalf of Government after being chosen as the Commonwealth's identity provider earlier last year.

The FBT year ended on 31 March 2021 and each employer is required to calculate their liability for FBT. Where a liability for FBT exists, an annual return is required to be lodged and any tax paid by 21 May 2021. However, if the return is lodged electronically by a Tax Agent the due date of lodgement and payment is 25 June 2021.

In addition, there may be specific COVID-19 related concessions available, some of which are noted below.

ALWAYS LODGE AN FBT RETURN

Where no FBT annual return is lodged the ATO have no time limit and can raise an FBT assessment at any time. Even if there is no FBT to pay we always recommend lodging a FBT return each year.

2021 FBT YEAR – RATES AND THRESHOLDS

2022 rates 2021 rates 2020 rates
FBT rate 47% 47% 47%
Gross up rates - Type 1 2.0802 2.0802 2.0802
Gross up rates - Type 2 1.8868 1.8868 1.8868
Interest rate on loan fringe benefits 4.52% 4.80% 5.37%
Car parking benefit threshold TBA $9.15/day $8.95/day

2021 Living Away from Home Allowances:

ATO guidelines (excerpt) for reasonable food and drink-within Australia

$ Per week
One adult 276
Two adults 414
Three adults 552
One adult and one child 345
Two adults and one child 483
Two adults and two children 552

COVID-19 CONCESSIONS

COVID-19 Assistance and Benefits

Where emergency assistance is provided to an employee at risk of being adversely affected by COVID-19, FBT is unlikely to apply. This includes food and temporary accommodation where employees were unable to travel due to lock downs or were required to self-isolate.

Items provided to employees that protect them from COVID-19 (such as gloves, mask, sanitisers) will be exempt, providing they’re in proximity to customers or clients, or involved in cleaning premises.

Flu vaccines & COVID-19 testing are exempt where they are provided by qualified medical practitioners and nurses, and available to all employees.

Car Parking and Car Benefits

When using the operating cost method (maintaining a valid logbook), if cars were garaged at the employee’s home during the COVID-19 pandemic and not driven, or driven minimally, the car will be deemed ‘not held for private use’ when calculating the taxable value. The ATO also accepts that where an employee’s driving patterns have changed, they may use their existing logbook to estimate their business use percentage.

The closure of the work car park, and the closure or reduced rates of car parking, may reduce the FBT liability. Employers should carefully consider the method with which they calculate the taxable value.

OTHER UPDATES

VEHICLES

We remind you that where motor vehicles are provided to employees or their associates for their private use, odometer readings must be recorded as at 31 March 2021 for each motor vehicle.

Guidelines for exempt vehicle benefits (i.e. commercial vehicles)

Many employers incorrectly believe that because these vehicles are “commercial” in nature there is no FBT liability to consider. This is not the case. Even if a vehicle is on the ATO list of approved commercial vehicles, an FBT liability may still arise.

FBT_2

The ATO guidelines state that private use of these vehicles must be restricted to travel between home and work (and back) and that any diversion in travel must add no more than 2km’s to the journey (e.g. picking up kids from school etc). In addition, the vehicle must not travel more than 1,000kms per year (previously 750km) in private usage (e.g. holidays) and no single journey for private purposes can exceed 200km’s. If the vehicles private usage exceeds these guidelines an FBT liability may arise.

If you have provided commercial vehicles to employees we strongly encourage you to speak with us concerning your potential FBT liability for these vehicles.

FBT_3

New Guidelines for Travel Expenses

Per TR2021/1 there is new guidance regarding whether an employee’s travel expenses are deductible, particularly the distinction between travelling ‘on work’ or for private purposes. Employers that reimburse or provide an employee’s travel costs, including transport, food and accommodation, should consider whether these are private expenses resulting in an FBT liability.

Retraining/Reskilling Staff

From 2 October 2020, an FBT exemption may apply to reskill/retrain staff who have been made redundant, are soon to be made redundant or are being redeployed to a different role within the employer’s business.

Audit Spotlight

The latest ATO statistics estimates that there is an annual FBT tax gap of over 1 billion dollars, being the difference between the amount expected to be collected and the amount actually collected. The ATO have officially confirmed they will be returning to a ‘compliance enforcement’ approach following the COVID-19 period, with particular focus the following areas:

  • Documentation and declarations – ensuring their completeness & validity
  • Car parking benefits
  • Car benefits
  • Expense payment benefits

From 1 April 2021 Onwards

The $10m turnover threshold for certain small business concessions will increase to $50m. Eligible employers will now be able to:

  • provide FBT-exempt car parking benefits on the employer’s premises; and
  • provide multiple portable electronic devices for predominately work-related purposes.

If you have any queries in respect of your potential FBT liability or would like StewartBrown to perform a FBT ‘health check’ on your business, please contact one of the StewartBrown Managers or Partners to discuss.

StewartBrown Financial Advisory march 2019 investment update

Given the upcoming federal election and the likelihood of the Australian Labor Party (ALP) winning the election, we wanted to bring you this update on the proposed changes we believe will impact clients and how we are positioning client portfolios to get ready for this change.

Sydney Office

StewartBrown
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495 Victoria Avenue

Chatswood, NSW, 2067
Tel: (02) 9412 3033
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info@stewartbrown.com.au


StewartBrown Advisory Pty Ltd
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Level 2, Tower 1,
495 Victoria Avenue

Chatswood, NSW, 2067
Tel: (02) 9412 3033
Fax: (02) 9413 4202
info@stewartbrown.com.au

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