10 March 2020
With the Fringe Benefits Tax (FBT) year end fast approaching (31st March 2020), it is good practice to review new rulings and legislative changes to FBT and consider any potential impacts to your business.
Broadly, FBT is paid by employers on certain benefits they provide employees (including directors or beneficiaries if they work in the businesses), employees' families or other associates.
Examples of fringe benefits include:
Employees using work vehicles for private purposes;
Providing gym memberships;
Providing private health insurance for employees and their family;
Providing entertainment, such as Christmas parties or concert tickets;
Some salary sacrifice arrangements; and
Housing, board or property arrangements.
Proposed changes to FBT Car Parking Benefits
The recently released TR 2019/D5 - Fringe benefits Tax: car parking benefits has the capacity to make previously FBT exempt car parking now very costly for business operators.
Through this Draft Ruling, the ATO proposes to treat all car parks that offer all-day parking (which is parking for more than six hours between 7am to 7pm) as 'commercial parking stations' within a 1km radius of workplaces. Accordingly, all car parks in shopping centres, hospitals and airports are likely to be considered 'commercial parking stations' irrespective of the fact it is generally not financially feasible to park at these locations all day.
As a result of this change of view, businesses that were previously deemed to not be providing a car parking fringe benefit under the previous view may now see their FBT expense rise substantially.
The above changes are proposed to take effect from 1 April 2020.
Other FBT changes
The ATO released Practical Compliance Guideline 2018/3 which applied from 1 April 2019 and outlines the compliance approach to assist in determining the private use of company vehicles used by employees.
The ATO have released publication regarding other compliance issues on their radar for the upcoming fringe benefit financial year, which includes items such as:
Car fringe benefits;
Incorrect treatment of entertainment expenses;
Car parking fringe benefits in line with the new definition as discussed;
Not applying fringe benefits Tax to the personal use of business assets by employees; and
Late lodgement of fringe benefit Tax returns.
If you offer employees any form of fringe benefit and would like further information on the above proposed changes or any fringe benefit Tax item please contact our office to discuss your options.