Tuesday, 31 March 2015 marks the end of another Fringe Benefits Tax (FBT) year.
Recent reforms mean some items may require your special attention this year.
Change of FBT & Gross-Up Rates
From 1 April 2014, the FBT rate increased from 46.5% to 47%, to align with the maximum personal income tax rate inclusive of Medicare Levy.
From 1 April 2015, the FBT rate will further increase to 49% resulting from the introduction of the National Disability Insurance Scheme.
This means the gross-up rates that apply to different types of benefits are as follows:
|Date fringe benefit provided||FBT rate||Gross-Up rate – Type 1 Benefits||Gross-Up rate – Type 2 Benefits|
|1/4/2014 – 31/3/2015||47%||2.0802||1.8868|
|1/4/2015 – 31/3/2016||49%||2.1463||1.9608|
The gross-up rates are used to determine the taxable value of fringe benefits provided.
Type 1 Benefits include those where the employer is entitled to a GST input tax credit for the benefit provided. Type 2 Benefits include those remaining benefits.
Transitional rules that applied to Living Away From Home Allowance (LAFHA) benefits where agreements were entered into prior to 7.30 pm on 8 May 2012, ceased to apply from 1 July 2014.
If you had any such agreements in place for employees required to live away from their usual place of residence, then you will need to consider the new rules to determine whether the food and accommodation components of the allowance are exempt from FBT for the year ending 31 March 2015 and beyond.
The new rules only allow the exemption for employees who owned or leased a home in Australia personally, or whose spouse did, throughout the assignment period during which the employee was required to live away from home. The use of that residence must have continued to be available to them during the period of their assignment. That residence must reasonably be expected to remain at their home at the assignment's conclusion.
Even where the above conditions are satisfied, the new rules only allow the exemption to apply for a 12-month period, commencing from the start of the assignment.
For employees subject to the transitional rules, the 12-month period was deemed to have commenced on 1 October 2012.
In practice, that means no exemption may apply for your employees who had already been on assignment during the transitional period.
For employers using the statutory formula method to calculate car benefits, the taxable value of the benefit will be 20% of the base value of the car for benefits provided from 1 April 2014, regardless of the number of kilometres travelled. (Less any contribution the recipient made.)
The only exception applies to cars provided under a pre-existing commitment entered into prior to 7.30 pm, 10 May 2011. The old statutory fractions may continue to be applied in those circumstances, meaning your employees should take odometer readings at 31 March.
The base value of the car should exclude fleet discounts and manufacturer rebates. It is reduced by one-third if the car was held by the employer for more than four years as at the start of the FBT year.
For employers using the operating cost method to calculate car benefits, remember that employees need to keep a log-book to record business vs private usage during a twelve week period. An updated log book is required where usage substantially changes or every five years.
Note that the business use status of cars reported to state/territory government registration authorities is now shared with the Australian Taxation Office (ATO). You should check whether benefits have been provided for those vehicles registered, as the ATO may investigate where no benefits are reported.
Car parking benefits
If you provide parking for your employees on your premises or in the vicinity, remember to obtain details of the lowest daily rate at commercial parking facilities located within one kilometre.
Transitional rules applying to salary packaging arrangements entered into before 22 October 2012 ceased to apply after 1 April 2014. All in-house benefits provided under salary packaging arrangements are now valued at their notional value.
FBT returns for the year ending 31 March 2015 are generally due for lodgement on 21 May 2015 with any tax payable by 28 May 2015. A lodgement extension to 25 June 2015 may be available, so contact your Moore Stephens representative for more details.
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