December 2024 - January 2025 Newsletter

Please click on the following link to view this month's newsletter for December 2024 - January 2025. We would like to highlight the following articles:-

Study Loan Indexation Changes

The bill to change the annual indexation for study and training loans has now received royal assent. Indexation is now based on either the Consumer Price Index (CPI) or Wage Price Index (WPI) – whichever is lower.

This change is backdated, taking effect from 1 June 2023. The new indexation rates for the two previous years are:

3.20% for 2023 year – reduced from 7.10%
4.00% for 2024 year – reduced from 4.70%.

Most taxpayers will see the credits applied to their HELP loan accounts by the end of January.

Proposed changes to HELP loans

The Australian government has proposed changes to the Higher Education Loan Program (HELP) system, expected to take effect by 1 June 2025, subject to legislative approval. Key aspects include:

20% Debt Reduction

A one-time 20% reduction in all HELP debts, applied automatically by the ATO before annual indexation on 1 June 2025. For example, a $27,600 HELP balance would decrease by approximately $5,520.

Higher Repayment Threshold

From 1 July 2025, the minimum income threshold for compulsory repayments will rise from $54,435 to $67,000. Repayments will apply only to income above this threshold, with proposed marginal rates:

Below $67,000: no repayment.
$67,001–$124,999: 15 cents per dollar over $67,000.
Above $125,000: $8,700 plus 17 cents per dollar over $125,000.

FBT and tax considerations for end-of-year parties and gifts

As the end-of-year season approaches, employers should consider the tax implications, particularly Fringe Benefits Tax (FBT), when planning holiday entertainment or gifts for employees. FBT is a tax employers pay on certain benefits provided to their employees or employees' associates (like family members). When planning a festive gathering, such as a Christmas party, it's important to determine if your event might attract FBT.

Here are some key points to consider:

Location and attendees
If your party is held on business premises during a working day and is only for current employees, you generally won't have to pay FBT on food and drinks. However, if the event is off-site or includes employees' associates, you might need to consider FBT, unless the cost per person is under $300 (including GST) and deemed a minor benefit.

Entertainment and gifts
If you provide gifts alongside the party, remember that gifts under $300 (including GST) per person can also qualify as minor benefits, exempting them from FBT. However, if gifts exceed this amount, FBT may apply.

Including your clients
Costs related to clients attending your event are not subject to FBT, are not income tax deducible and you will not be eligible to claim a GST input tax credit for the expenditure.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.