Fringe Benefits Tax (FBT/ return preparation season is now upon us and it is timely to highlight potential traps for FBT-exempt and rebatable employers when completing the FBT return.
Broadly, the FBT exemption allows employers to provide benefits to their employees without having to pay FBT in respect of these benefits. The exemption may be available for publicand non-profit hospitalsand ambulance services (subject to a capping threshold of $17,000 per employee), and to public benevolent institutions and health promotion charities (subject to a capping threshold of $30,000 per employee). The thresholds apply to the grossed-up taxable value of benefits provided.
Rebatable employers (such as religious institutions and trade unions), may be entitled to the FBT rebate of 48% of the employer’s FBT liability. The rebate is subject to a cap of $30,000 per employee (grossed-up taxable value).
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 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.
Where a capping threshold has been exceeded for an employee, item 22 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).
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
We hope the above will be of assistance to you in preparing your 2010 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.