The Fringe Benefits Tax (FBT) year ends on 31 March. We’ve outlined the hot spots for employers and employees.
FBT updates and problem areas
• Assistance and benefits provided due to COVID-19
• Motor vehicle problem areas
• Mismatched FBT and income tax amounts
• Business assets personally used by owners and staff
• Not lodging FBT returns
• Salary sacrifice and superannuation guarantee
• Car parking changes
• Travelling or living away from home
• Retraining and reskilling benefits
• Housekeeping essentials
Important FBT issues
Assistance and benefits provided due to COVID-19
Many businesses are likely to have provided different types of benefits and assistance to their employees due to COVID-19. It can be quite challenging to work out whether FBT should apply.
Just keep in mind that minor benefits should be FBT exempt where their individual cost is under $300 and it is reasonable to treat the benefit as minor (for example, provided infrequently).
Outside of this and in many cases, there are specific FBT concessions that could be available, but it is important to work through these concessions carefully.
Working from home
Office and site closures due to COVID-19 may mean that your employees worked from home for a portion of the FBT year. Many employers have provided their employees with work-related items to assist their employees during this period.
Portable electric devices such as laptops and mobile phones are commonly used for work. Providing such devices to your employees shouldn’t trigger a FBT liability, as long they are primarily used by your employees for work.
Where multiple similar items have been provided during the FBT year, the situation becomes more complex unless your business has an aggregated turnover of less than $50m (previously, this threshold was less than $10m).
If an FBT exemption isn’t available, it’s often worthwhile instead considering whether the FBT liability of such items could be reduced to the extent the employee could claim a once-only deduction in their personal return (i.e., had they purchased the item themselves).
Rapid antigen testing
With the use of rapid antigen tests becoming more common, it is important to keep across the proposed changes in this area.
Under the current rules, if your business regularly provides your employees with rapid antigen tests so that they can attend their regular place of work, a FBT liability may potentially arise.
The good news is that the government has proposed changes to the rules to make it clear that such work-related COVID-19 testing benefits would be FBT exempt. If the rules are passed, the changes are intended to apply retrospectively to include benefits provided in the 2022 FBT year.
Not lodging FBT returns
The ATO is concerned that some employers are not lodging FBT returns or lodging them late to avoid paying tax.
While we hope the ATO understands that this was a difficult year for many businesses, it’s likely the ATO will still pay close attention to any employer that:
• Is registered for FBT but lodges late. If your business is likely to face delays in lodging the FBT return, it’s usually a good idea to get in touch with the ATO early and ask for an extension request; or
• Is not registered for FBT. If your business employs staff (even closely held staff such as family members), and is not registered for FBT, it’s essential you have reviewed your position and are certain that you do not have an FBT liability. If the business provides cars, car spaces, reimburses private (not business) expenses, provides entertainment (food and drink), employee discounts etc., then you are likely to be providing a fringe benefit. Make sure you have reviewed the FBT client questionnaire we sent you!
Salary sacrifice and superannuation guarantee
From 1 January 2020, new rules have come into effect to ensure that an employee’s salary sacrifice superannuation contributions cannot be used to reduce the amount of superannuation guarantee (SG) paid by the employer.
Under previous rules, some employers were paying SG on the salary less any salary sacrificed contributions of the employee. Previously, employers were required to contribute a percentage (from 1 July 2021, this is 10%) of an employee’s Ordinary Time Earnings (OTE) and they could choose whether or not to include the salary sacrificed amounts in OTE.
Under the new rules, the SG contribution is a percentage (from 1 July 2021, this is 10%) of the employee’s ‘ordinary time earnings (OTE) base’. The OTE base is the employee’s OTE and any amounts sacrificed into superannuation that would have been OTE, but for the salary sacrifice arrangement.
It can be difficult to ensure the required records are maintained in relation to fringe benefits – especially as this may depend on employees producing records at a certain time. If your business has cars and you need to record odometer readings at the first and last days of the FBT year (31 March and 1 April), remember to have your team take a photo on their phone and email it through to a central contact person – it will save running around to every car, or missing records where employees forget.