Fringe Benefits Tax (FBT) is payable by employers when certain benefits, other than salary or wages, are provided to employees. FBT was introduced to prevent employers from reducing employees' tax liability by providing benefits to them. Most employers who provide employees with fringe benefits throughout the year must register and pay FBT.
Are you liable for FBT?
If you are not sure if you are giving your employees a benefit and, as a result, liable for FBT here are some following questions you should ask yourself:
· Do you make vehicles owned by the business available to employees for private use?
· Do you provide loans at reduced interest rates to employees?
· Have you released an employee from an owed debt?
· Have you paid for, or reimbursed, an expense incurred by an employee?
· Do you provide entertainment by the way of food, drink or recreation to your employees?
· Do any of your employees have a salary package arrangement in place?
· Do you provide a house or unit of accommodation to your employees?
· Do you provide employees with living-away-from-home allowances?
· Have you provided your employees with goods at a lower price than they are normally sold to the public?
What's exempt from FBT?
The following work related items are already exempt from FBT:
- A briefcase
- A calculator
- A tool of trade
- An electronic diary or similar item, or
- A notebook computer, a laptop computer or a similar portable computer – used primarily for work purposes
- Personal Diary Assistant (PDA) - hand held devices used as a personal organiser
- Portable printers specifically used with a portable computer
FBT TAX TIPS
Fringe Benefits Tax: Australian Taxation Office Targets Company Cars
The Australian Taxation Office (ATO) have released new guidelines in complying with and accessing Fringe Benefits Tax (FBT) car-related exemptions. This leaves self-employed tax payers open to a potential FBT bill. Circumstances where an entity owns a dual cab ute and the director/owner, and their family use that same car for camping trips, holidays or trips to footy practice could be potentially caught with a FBT bill at 31 March 2019.
Vehicles Considered to be Cars Under FBT
For Fringe Benefits Tax (FBT) purposes, the following types of vehicles (including 4-wheel drives) are cars:
· Motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of 1 tonne or more)
· All other goods-carrying vehicles designed to carry less than 1 tonne
· All other passenger-carrying vehicles designed to carry fewer than 9 occupants
Employers can access the exemptions under the new guidelines where:
1. Employers allow employees limited private use of an eligible vehicle that
· adds no more than 2kms to their trip between home and work
· doesn't exceed 1,000kms in total for the FBT year (1 April – 31 March), and where any one return journey doesn't exceed 200kms.
2. Employers provide the vehicle to their employees to do their job and it isn't part of their salary package arrangement, and
3. The value of the vehicle is less than the luxury car tax threshold (for the 31 March 2019 FBT year, the threshold is $66,331)
A dual cab that has a designed load-carrying capacity of less than 1 tonne may qualify for the work-related use exemption only if the vehicle is not designed for the principal purpose of carrying passengers. If the total passenger weight determined exceeds the remaining 'load' capacity, the vehicle is treated as being designed for the principal purpose of carrying passengers and is ineligible for the work-related use exemption.
A dual cab with a gross vehicle weight of 1,950kg, a basic kerb weight of 1,400kg and a designed seating capacity of 5 would be considered a vehicle designed principally for carrying passengers.
Keeping Records to Minimise FBT Implications
In light of the new guidelines it is best to keep the following documentation:
· Employee fuel and oil expenses declaration, see here. The declaration must be received from the employee by 21 May.
· For new cars, copies of invoices for purchase and modifications
· Total kms travelled for the FBT year (opening odometer reading at 1 April 2018 and closing odometer reading at 31 March 2019)
· Days available for private use
· A log book over a 12-week representative period
A car fringe benefit arises where a car, provided by the employer, is deemed to be available for private use by an employee. When an employee is travelling for either work or leisure and the car is parked in a commercial airport carpark, the car is in most instances deemed to be available for private use.
The ATO has recently issued a class ruling outlining an arrangement that allows employees to park at the airport without a fringe benefit arising for that period of time. There are a few conditions that need to be met in order to ensure that a fringe benefit does not arise:
· A Corporate Bailment Agreement has been entered into with the airport parking, and that agreement is covered by an ATO class ruling
· The keys must be surrendered to the airport parking corporation
· The employer (or a representative) makes the booking for the car to be parked
It is important to note that all three of the above must be met to ensure that a fringe benefit does not arise. Currently the two parking facilities at Brisbane Airport that have an approved agreement are Andrew's Airport Parking and Gateway Airport Parking.