Fringe Benefits Tax (FBT) return preparation season is now upon us and this is a timely reminder of potential traps for FBT-exempt and rebatable employers when completing the FBT return.
The issues discussed may affect both exempt benefits (whether the capping threshold is $17,000 or $30,000 per employee) and rebatable employers (such as religious institutions).
Trap 1: Disclosure requirements for FBT-exempt employers
These are different to those for most employers, specifically:
- Where the relevant capping threshold has been exceeded for an employee, only item 13C (aggregate non-exempt amount – hospitals, ambulances, public benevolent institutions and health promotion charities only) must be completed with the aggregate grossed-up value of benefits in excess of capping amounts. Many exempt entities incorrectly disclose figures in items 13A and/or 13B (aggregate amount).
- Where a capping threshold has been exceeded for an employee, item 22 (aggregate non-exempt amount – hospitals, ambulances, public benevolent institutions and health promotion charities only) requires the disclosure of the total value of taxable benefits provided (with the exception of benefits to be excluded from the capping amounts noted above, including meal entertainment, entertainment facility leasing expenses and car parking benefits).
[The references above are to the 2010 FBT return as the 2011 FBT return is yet to be released by the ATO.]
Trap 2: The payment or reimbursement of an employee’s car parking expenses and grocery bills are not excluded from the concessional caps.
The payment or reimbursement of an employee’s car parking expenses is an expense payment fringe benefit and is to be distinguished from an employer providing a car parking benefit. The taxable value of car parking benefits are excluded from the concessional cap.
Similarly, the payment or reimbursement of an employee’s grocery bill is an expense payment fringe benefit and is to be distinguished from the provision of meal entertainment. The taxable value of meal entertainment is also excluded from the concessional cap.
Trap 3: Reportable Fringe Benefit Amount requirements mutually exclusive to lodging requirements for FBT returns
All employers (including FBT exempt and rebatable employers) are required to include a value for reportable fringe benefits on the employee’s payment summary where the notional taxable value of reportable fringe benefits received by an employee during the FBT year is more than $2,000. Accordingly, it is possible to have reportable fringe benefit amounts without having to complete a FBT return.
We hope the above will be of assistance to you in preparing your 2011 FBT returns.
