Fringe Benefits Tax Update – The hard facts (legislation changes)
As we head towards the end of the 2016 Fringe Benefits Tax (FBT) year, I thought it would be a good time to recap on some of the key rates, dates and legislative changes that may apply.
For businesses lodging their own FBT returns, you need to have lodged your return with the ATO and paid the final liability (where applicable) by 28 May 2016.
If you are lodging your return using a registered Tax Agent, you must have appointed the Tax Agent by 21 May 2016 to be eligible for the lodgement extension of 25 June 2016.
Please note: even if you are eligible for the lodgement extension, your final liability payment (where applicable) will still be due by 28 May 2016.
Just remember that wherever possible, you and your business should be collecting data, updating policies and reviewing potential FBT implications throughout the year to ensure your FBT preparation goes as smoothly as possible.
Rates & Thresholds
1. Fringe Benefits Tax Rate and gross-up rates
Due to the Temporary Budget Repair Levy, the FBT rate and gross-up rates are still adjusted for the FBT year ended 31 March 2016.
|FBT Year||FBT Rate||Type 1 gross-up rate||Type 2 gross-up rate|
|Ending 31 March 2016 & 2017||49%||2.1463||1.9608|
|Ending 31 March 2018 onwards||47%||2.0802||1.8868|
2. Other key Fringe Benefit Tax rates and thresholds
Each year, the ATO publishes a number of Tax Determinations with the various rates and thresholds. Here we have consolidated some of the key rates and thresholds for the FBT year ended 31 March 2016 (with references where applicable).
|Reportable Fringe Benefits||Taxable value >$2,000 (grossed-up value > $3,921)||Employee payment summary reporting||ATO website|
|Statutory/benchmark interest rate||5.65% per annum||Loan fringe benefits||TD 2015/8|
|Car parking threshold||$8.37 per day||Car parking fringe benefits||TD 2015/11|
|Record keeping exemption threshold||$8,164 total employer aggregate fringe benefits||General FBT record keeping requirements||TD 2015/5|
3. Concessional capping thresholds
In line with the FBT rate and the gross-up factors changing, the capping thresholds for FBT exemption and FBT rebate are also changing.
Here are the thresholds for employers that are eligible for either FBT exemption or rebate.
|Employer||FBT concession year ending 31 March 2016 and 31 March 2017||FBT concession for the year ending 31 March 2018 and ongoing|
|Public benevolent institution other than a public hospital||$31,177||$30,000|
|Public hospitals, non-profit hospitals and public ambulance services||$17,667||$17,000|
|Rebateable employers – certain registered charities, non-government and non-profit organisations||Rebate of 49% capped at $31,177||Rebate of 47% capped at $30,000|
The 2015-16 Federal Budget saw a few changes made to FBT that are worth mentioning. Although these measures do not take effect until the FBT year commencing 1 April 2016, it is worth business noting now so that you can be prepared.
- Work-related electronic devices
As the last Federal Budget was largely geared towards small business, one FBT measure that was introduced was to remove the limitation of one qualifying work-related portable electronic device, where the items have substantially similar functions.
Small business is defined as a business with less than $2million turnover for the purposes of applying this concessional treatment.
This is a nice little incentive to employees where you can possibly provide them with a couple of devices to make their lives a little easier.
Especially with today’s ‘smart’ technology, it is difficult for an employer to have to differentiate the functionality between portable electronic devices, so this concession provides you with a little bit of relief.
- Salary sacrificed meal entertainment
All salary sacrificed meal entertainment benefits will be reportable from the 1 April 2016.
This will impact certain employers including charitable organisations, public and not-for-profit hospitals, public benevolent institutions and other not-for-profit institutions, clubs and associations.
The measure introduces a new concessional cap of $5,000 (grossed up) for FBT exemptions and rebates relating to the provision of meal entertainment and entertainment facility leasing expense (EFLE) to employees by way of salary sacrifice.
It was felt that many employees working for FBT exempt or rebateable employers were fully utilising the concessional cap (i.e. with car salary sacrifice) but then also sacrificing a lot meal entertainment as well, taking advantage of their employer’s FBT status. This measure is to ensure that there is a limitation to the degree of benefits these employees receive.
More to come…
Should the Federal Budget for 2016-17 (expected to be handed down on 10 May 2016) result in any further legislative changes, we will be sure to cover those changes separately.
In the coming weeks we will release some further guidance on FBT and some helpful hints to help you survive the FBT season.
In the meantime, if you are interested in more information around meal and expense payment fringe benefits, please watch our most recent FBT webinar:
YouTube Video – ADP and Concur Webinar: FBT – the important bits you miss
Written by: Angela Lehmann