Budget 2008 - Sal sacrifice for IPs gone

The Government will amend the fringe benefits tax (FBT) law to ensure that the full value of a benefit that has been provided to both an employee and an associate in relation to a jointly held asset will be subject to FBT. This tax integrity measure will have effect for new arrangements from 7.30 pm (AEST) on 13 May 2008. This measure will have an ongoing gain to revenue which is estimated to be $49.0 million over the forward estimates period.

The measure will re‑establish the principle that income and deductions arising from jointly held assets should be allocated between joint owners according to their legal interests.

Employees who have already entered into salary sacrifice agreements with their employer will be able to utilise existing arrangements until 31 March 2009 (that is, the end of the current FBT year). This will provide time for employers and employees to renegotiate salary packages to avoid incurring a FBT liability.

This delivers on the Government's commitment to responsible economic management

 

Oh Dear,

If I understand this correctly that may not be good news for Julia and her new book release!

Maybe HDTs aren't so bad after all!

Cheers - Gordon

 

Hi Nick,

If I read what you're saying, you could still salary sacrifice a portion equivalent to your percentage ownership without incurring FBT (you would claim the expense back at the end of the FY anyway), so still improving cashflow. However, anything that you pay above your portion ownership (on behalf of your lower income spouse) would be hit by FBT, thus preventing shifting income to the lower tax rate. Is that correct?

Obviously the Government, being aware of this, would also be aware that this further reduces the benefits of investing (and removing a compensating provision for low rental yields). So much for helping expand the rental pool or slowing the increase in rents...

Cheers, Dave

 

Hi Nick,

I saw this on the SMH but can't find it in the Budget 08 (http://www.smh.com.au/ssi/budget-2008/speech.pdf).
I can't find any extra information...

What will this mean for Transition to Retirement? There are going to be alot of unhappy 55+ voters...

Cheers,

Dan

 

Lads
still early days
I am sure the devil will be in the detail
Will be able to make comment once i get to read it in full
I must say though i did struggle to stay awake through it
Cheers
Nickm