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Make sure you’ve covered these changes to FBT rulings for 2018
With Fringe Benefits Tax (FBT) fresh on most accountants and business owner’s minds as the end of the FBT year approaches, there are a few changes you may need to be aware of before you commence your return.
1. What is the current FBT tax rate?
For the FBT year ending 31 March 2018, the current rates are 47%.
This has been reduced when the government added an extra 2% levy on individuals whose taxable income exceeded $180,000 for a temporary budget repair. This levy is no longer applicable.
What you need to check
With this change in FBT rates, there has been a reduction in the exemption thresholds for eligible non-for-profit organisations, from $17,667 and $31,177 to $17,000 and $30,000 respectively.
We highly recommend that you check your employees’ current salary packaging.
2. Car parking
The definition of ‘small business’ is key to the FBT car parking exemption. The ATO rule small business as a business with a turnover of less than $10 million in the 2017 income tax year.
If your business has a turnover less than $10 million you will be able to take advantage of the FBT exempt car parking for employees in the 2018 fringe benefit year provided:
- the parking is not provided in a commercial car park
- you are not a government body, a listed public company or a subsidiary of a listed public company
What you need to check
Check whether your small business will satisfy the conditions for exempt car parking for the current FBT year or whether it will only apply for future FBT years.
3. Employee travel expenses
Confused about employee travel expenses?
Although the rules haven’t changed, Draft Taxation Ruling (TR2017/D6) covers the ATO’s position on these types of expenses and brings them up to date with the business environment.
It includes clarification on when employee travel expenses, such as transport and accommodation are deductible as income and FBT taxes.
What you need to check
As a consequence of the withdrawn Miscellaneous MT 2030 which contained the ‘21 day rule’, which impacts how the travel and living away from home allowance (LAFHA) have historically been treated for FBT purposes, check if an amended FBT return will be necessary.
4. Uber and taxis
Taxi travel when used for business purposes, for example, a single taxi trip beginning or ending at the workplace or a trip to transport a sick employee, is FBT exempt. If these trips are taken using an Uber or other ride-sharing vehicles, they are not exempt.
The ATO is reviewing its definition of ‘taxi’ (TDP 2017/2) as it currently states that the exemption “does not extend to … ride-sourcing services … not licensed by a state or territory as a taxi”.
They are currently considering whether an FBT exemption should apply to ride-sharing vehicle and this as a priority with the end of the FBT year almost here. We will let you know when we hear of their ruling on this matter.
5. Personal use of company motor vehicles
Any work vehicle purchased by a business should be treated as a car fringe benefit or residual fringe benefit and potentially trigger an FBT liability.
Any private use of the vehicle by employees or directors of the company; small trips like driving to the supermarket or picking the children up from school, even garaging the vehicle at home, FBT is likely to apply.
The ATO will be looking at the private use of work vehicles closely.
What you need to check
Ensure up to date logbooks are completed for each vehicle and personal use is accounted for.
6. Utes and commercial vehicles
Commercial vehicles, those considered as vehicles designed for work purposes and not to carry passengers such as utes and vehicles over one tonne were exempt if certain conditions were satisfied.
However, there were always tight rules that businesses needed to follow to ensure they fell under FBT exemption.
Some of the rulings include that the vehicle is not fitted with child restraint seats, evidence of a company policy against private use of these vehicles, the purchase price of the vehicle and the vehicle is not part of a salary sacrifice arrangement.
The guidance provides points and examples on how to determine whether private travel would be considered minor, infrequent and irregular.
What you need to check
Employers need to check the use of commercial vehicles otherwise they could be at high risk of significant FBT liabilities.
Here are the rulings to assess whether your business vehicles meet the private use exemption criteria provided on the principle-based approach.
7. Reportable fringe benefits
The $2,000 threshold hasn’t changed but Centrelink has advised of changes to the way they use the Reportable Fringe Benefits Amount (RFBA) on employee payment summaries.
From January 1, 2018, Centrelink will be using 100% of the RFBA to determine some family benefit payments (unless you are a not-for-profit organisation).
What you need to check
Ensure your employee payment summaries include any Reportable Fringe Benefits Amount (Not-for-profit organisations are exempt).
Help is available!
Don’t forget our accountants at Penguin Management have years of experience in FBT rulings and returns.
Call us now on +61 2 8298 5301 for help or get in touch via the form on this page.
Related Reading
Streamline your FBT reporting for your company’s vehicles next year with a log book apps. Here’s our roundup of some of the best logbook apps currently available.
Still unsure on the latest FBT rulings? The ATO has a helpful & useful reference page here, which outlines all the tax’s rates and thresholds for all inclusions.
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