What you need to know about Fringe Benefits Tax this financial year

The annual fiscal period for Fringe Benefits Tax (FBT) ends on the 31st March 2013 and is fast approaching.  The due date for lodgement of the 2013 FBT returns is the 28th May 2013. Employers have obligations to declare the value of benefits provided to employees during the period from 1 April – 31 March annual. In order to lodge an FBT return the employer’s business entity must be registered for FBT with the Australian Taxation Office.

On or prior to 31 March it is important to ensure relevant documentation and substantiation such as declarations and employee contributions are calculated and brought to account to ascertain FBT liabilities.

FBT Exemptions – work related items

When reviewing fringe benefits provided to employees there are exemptions that may apply. In particular and common is the exemption for eligible worked related items under section 58X of the act which applies for one item per annum per employe.  The list eligible work related items includes portable electronic devices such as laptop computer or similar portable computer, a calculator, an electronic diary, a PDA or similar and a mobile phone. The other items on list include computer software, protective clothing, briefcase and tools of trade. However in order to obtain this exemption the employer must document and ensure that the work use test is satisfied, that is the work related item(s) must be for “primary for use in the employee’s employment”. It is also essential for the employer to properly document the reason the item was provided to the employee, the type of work performed by the employee and how the item relates to the employees employment duties. This can be referenced back to the employee’s job description and duty statement or the business human resource policies such as private usage restrictions.

There are minor benefit exemptions that may also apply for benefits, which are one off in nature and less than $300 per benefit provided.

Changes to FBT Act

There are particular changes to the FBT Act in respect to benefits being provided to employees. The main benefits that have been amended more recently or are currently under review;

1. Motor Vehicle Statutory rates (implemented from and for the 2012 FBT year)
2. Living Away from home Allowances (implement in 1 October 2012 for 2013 FBT Year)
3. Airline Transport Fringe Benefits (currently under review)

Motor Vehicle Fringe Benefits

For proper documentation and assessment of applicable statutory rates, a statutory declaration of k/m travelled should be completed by an employee for whom a vehicle is provided and paid for by an employer.

The 2013 statutory rates for motor vehicle fringe benefits are;

Living Away from Home Allowance

There has been an overhaul of the living away from home allowance (LAFHA) benefits. Whereby benefits provided on or after 1 October 2012 in order to be considered FBT exempt, the main changes to be aware of include:

• Employees are required to ‘maintain a home in Australia for their immediate use and enjoyment’ whilst they are receiving LAFHA. 
• The employee must usually reside in Australia to qualify for LAFHA
• Introduction of a ‘New 12 Month Rule’ limiting LAFHA to 12 Months per a location.
• The bulk LAFHA benefits being received i.e food and accommodation will have to be substantiated. 
• Amended declaration and documentation requirements
• Transitional rules apply to existing LAFHA arrangements entered into prior 8 May 2012, these transitional rules apply to Australian Permanent Residents only and do not apply to temporary or foreign residents.

* Footnote

1.  Table extracted from National Tax & Accountants’ Association Ltd FBT training materials.