FRINGE BENEFITS TAX ("FBT")
The FBT year ended on 31 March 2022 and each employer is required to calculate their liability for FBT. Where a liability for FBT exists, an annual return is required to be lodged and any tax paid by 21 May 2022. However, if the return is lodged electronically by a Tax Agent the due date of lodgement and payment is 25 June 2022.
In addition, there may be specific COVID-19 related concessions available, some of which are noted below.
ALWAYS LODGE AN FBT RETURN
Where no FBT annual return is lodged the ATO have no time limit and can raise an FBT assessment at any time. Even if there is no FBT to pay we always recommend lodging a FBT return each year.
2022 FBT YEAR – RATES AND THRESHOLDS
|2023 rates||2022 rates||2021 rates|
|Gross up rates - Type 1||2.0802||2.0802||2.0802|
|Gross up rates - Type 2||1.8868||1.8868||1.8868|
|Interest rate on loan fringe benefits||4.52%||4.52%||4.80%|
|Car parking benefit threshold||TBA||$9.25/day||$9.15/day|
2022 Living Away from Home Allowances:
ATO guidelines (excerpt) for reasonable food and drink-within Australia
|$ Per week|
|One adult and one child||354|
|Two adults and one child||496|
|Two adults and two children||567|
COVID-19 Assistance and Benefits
Where emergency assistance is provided to an employee at risk of being adversely affected by COVID-19, FBT is unlikely to apply. This includes food and temporary accommodation where employees were unable to travel due to lock downs or were required to self-isolate.
Items provided to employees that protect them from COVID-19 (such as gloves, mask, sanitisers) will be exempt, providing they’re in proximity to customers or clients, or involved in cleaning premises.
Flu vaccines & COVID-19 testing are exempt where they are provided by qualified medical practitioners and nurses, and available to all employees.
Car Parking and Car Benefits
When using the operating cost method (maintaining a valid logbook), if cars were garaged at the employee’s home during the COVID-19 pandemic and not driven, or driven minimally, the car will be deemed ‘not held for private use’ when calculating the taxable value. The ATO also accepts that where an employee’s driving patterns have changed, they may use their existing logbook to estimate their business use percentage.
The closure of the work car park, and the closure or reduced rates of car parking, may reduce the FBT liability. Employers should carefully consider the method with which they calculate the taxable value.
We remind you that where motor vehicles are provided to employees or their associates for their private use, odometer readings must be recorded as at 31 March 2022 for each motor vehicle.
Guidelines for exempt vehicle benefits (i.e. commercial vehicles)
Many employers incorrectly believe that because these vehicles are “commercial” in nature there is no FBT liability to consider. This is not the case. Even if a vehicle is on the ATO list of approved commercial vehicles, an FBT liability may still arise.
The ATO guidelines state that private use of these vehicles must be restricted to travel between home and work (and back) and that any diversion in travel must add no more than 2km’s to the journey (e.g. picking up kids from school etc). In addition, the vehicle must not travel more than 1,000kms per year (previously 750km) in private usage (e.g. holidays) and no single journey for private purposes can exceed 200km’s. If the vehicles private usage exceeds these guidelines an FBT liability may arise.
If you have provided commercial vehicles to employees we strongly encourage you to speak with us concerning your potential FBT liability for these vehicles.
New Guidelines for Travel Expenses
In 2021 the ATO issued a new Tax Ruling (TR2021/1) providing new guidance regarding whether an employee’s travel expenses are deductible, particularly the distinction between travelling ‘on work’ or for private purposes. Employers that reimburse or provide an employee’s travel costs, including transport, food and accommodation, should consider whether these are private expenses resulting in an FBT liability.
From 2 October 2020, an FBT exemption may apply to reskill/retrain staff who have been made redundant, are soon to be made redundant or are being redeployed to a different role within the employer’s business.
The latest ATO statistics estimates that there is an annual FBT tax gap of over 1 billion dollars, being the difference between the amount expected to be collected and the amount actually collected. The ATO have officially confirmed they will be returning to a ‘compliance enforcement’ approach following the COVID-19 period, with particular focus the following areas:
- Documentation and declarations – ensuring their completeness & validity
- Car parking benefits
- Car benefits
- Expense payment benefits
Small business definition for FBT purposes
The $10m turnover threshold for certain small business concessions has increased to $50m. Eligible employers are now be able to:
- provide FBT-exempt car parking benefits on the employer’s premises; and
- provide multiple portable electronic devices for predominately work-related purposes.
If you have any queries in respect of your potential FBT liability or would like StewartBrown to perform a FBT ‘health check’ on your business, please contact one of the StewartBrown Managers or Partners to discuss.