As the FBT year draws to a close on 31 March 2017, the ATO will continue to focus its efforts on small to medium businesses. The ATO, through its FBT Taskforce, has conducted audits and reviews of employers in this sector over the last 18 months.
The ATO uses information disclosed by a business in their income tax return to identify cases for an FBT review. In particular, where an employer’s tax return shows that an FBT return should have been lodged and it wasn’t. Whilst a taxpayer’s disclosure may prompt a review, this does not automatically assume that the employer has FBT compliance issues. This will all depend on an analysis of the facts in relation to the FBT law.
When the Federal Government handed down its May 2015 Budget they introduced a 2% Temporary Budget Deficit Levy that was effective from 1 April 2016. This meant that the FBT rate increased from 47% to 49% and was to remain in place for a two year period.
On 1 April 2017, the FBT rate of 49% is due to revert back to 47%. This rate change will be applicable for the 2017-18 FBT year and onwards. For the 2017 year though, the rate will remain at 49%.
A few key changes to note are:
1. Changes to FBT Exemption for Electronic Devices
The changes to FBT for electronic devices for the 2017 year, commencing 1 April 2016, remains in place. This means that small businesses are no longer limited to providing only one portable electronic device per employee per FBT year.
Employers are able to provide their employees with multiple work related portable electronic devices with the additional devices also being exempt from FBT, regardless of whether the devices have substantially similar functions. It is important to note though that the “work related use test” rules still apply.
2. Meal Entertainment
For the 2017 FBT year, commencing 1 April 2016, any salary packaged meal entertainment and entertainment facility leasing expenses will be subject to a separate single grossed up cap of $5,000. This means that FBT will be payable once the capping thresholds have been exceeded. All salary packaged entertainment is potentially reportable and so should be included on an employee’s payment summaries.
From 1 April 2016, the 50/50 method and 12 week register is no longer available for salary packaged meal entertainment and entertainment facility leasing expenses.
3. Vehicle Rates
The cents per kilometre for vehicles, other than cars, has increased. For an engine capacity of 2,500cc, a rate of 52 cents applies. Above this capacity, a rate of 63 cents applies and for motorbikes, the rate of 16 cents applies.
4. Car Parking Threshold
The car parking daily fee threshold, adjusted annually, has been determined at $8.48 for the FBT year ending 31 March 2017.
A Note for the 2017-18 Year
From 1 July 2017, the government has changed the way fringe benefits will be treated for the calculation of several tax offsets. The meaning of adjusted fringe benefits total has been modified so that the gross rather than the adjusted net value of reportable fringe benefits is used. Adjusted fringe benefits total is used to calculate a taxpayer’s entitlement for the low income superannuation tax offset, the seniors and pensioners tax offset, the net medical expenses tax offset and the dependent tax offsets.
If you have any queries or concerns relating to any aspect of your FBT liabilities, then please contact us.