You might provide your employees with benefits other than their salary or wages in your business. Non-cash benefits provided to employees or associates of employees are fringe benefits. This is different to when you pay money to your employees. Where you pay cash to your employees, you treat the payment as part of the employee’s salary or wage and make normal employee deductions, such as PAYE.
There are 4 main types of fringe benefits. You need to work out the taxable value, the actual cost to be able to calculate fringe benefit tax.
- Employer contribution to employee.
- Employers provided goods and services.
- Employers provided low interest loans.
- Employers provided motor vehicles for private use
Some entertainment expenses may be subject to fringe benefit tax (FBT) if they are enjoyed or received by employees.
Changes to FBT Record Keeping
The government has announced that it will provide the Commissioner of Taxation with the power to allow employers to rely on alternative records, such as existing corporate records where adequate, to finalise their FBT returns. This would be an alternative to employee declarations and other prescribed records.
Worker Entitlement Contributions
Under changes proposed by the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019, the exemption for worker entitlement contributions will only be available to an employer if the contribution is made to a fund either:
- registered under the Fair Work (Registered Organisations) Act 2009
- established by or under, and operating under, a law of the Commonwealth, a state or territory, for the purposes of ensuring long service leave is paid.
Worker Entitlement Funds
There will be changes for funds that are currently endorsed, or seeking endorsement, as a worker entitlement fund for FBT purposes should the proposed amendments become law. They will be required to register under the Fair Work (Registered Organisations) Act 2009 if they wish to continue to operate as a worker entitlement fund. Registration will involve considerations and obligations unrelated to FBT.
FBT Retraining and Re-skilling Exemption
Under changes to the FBT laws, employers who provide a benefit in respect of training or education to employees who are redundant – or are soon to be made redundant – may now be exempt from FBT. The exemption can be applied to retraining and re-skilling benefits provided on or after 2 October 2020.
Retraining and re-skilling benefits that are exempt from FBT are not included in your FBT return, or in your employee’s reportable fringe benefits amount. If you’ve already lodged your 2021 FBT return and paid any FBT owing, you can amend your 2021 FBT return to reduce the FBT paid for retraining and re-skilling that is exempt.
Access to certain FBT small business concessions
Under changes to the FBT and income tax laws, businesses with an aggregated turnover of $10 million or more and less than $50 million will be able to access certain existing FBT small business concessions.
Taxi Travel
The taxi travel FBT exemption was recently amended to include travel to and from the workplace on or after 1 April 2019 in a vehicle involving the transport of passengers for a fare (other than in a limousine). This includes travel in a ride-sourcing vehicle, or other vehicles for hire that don’t have a taxi licence.
Administrative changes
Deferral of due date for balancing payment for FBT
The due date for the balancing payment for fringe benefits tax (FBT) for employers using tax practitioners who lodge FBT returns electronically has been deferred from 28 May to 25 June. This change has been made under administrative powers of the Commissioner of Taxation. The due date of the balancing payment is now aligned to the due date of the FBT return lodgment date of 25 June for this class of taxpayers.This deferral will apply from the 2021 FBT year onwards.
Coronavirus (COVID-19) Impacts
Your business may have been impacted by COVID-19 and you may provide your employees with benefits as a result, which may affect your FBT obligations. This includes allowing your employees to garage a work vehicle at home and paying for items that allow your employees to work from home.
Deductibility of Employee Travel Expenses
The new Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employee’s transport expenses? was published on 17 February 2021.This ruling finalises Draft Taxation Ruling TR 2019/D7 Income tax: when are deductions allowed for employees’ transport expenses? It provides guidance on when an employee can deduct transport expenses under section 8-1 of the Income Tax Assessment Act 1997.
TR 2021/1 explains that generally, transport expenses for travel between home and a regular place of work do not have the required connection to employment income and are not deductible. In contrast, transport expenses incurred when travelling between work locations are generally deductible provided neither location is the employee’s home. The ruling also explains a number of special cases or exceptions to these general rules.https://www.smggroup.com.au/
SMG can provide you with general advice on the impact of FBT and the amount of FBT you’re obliged to pay. We have been assisting businesses with services such as FBT simple to understand, complying with your obligations, its preparation, review and lodgement.
We ensure that you meet your FBT obligations, while minimising the impact it has on your business.