With the FBT season now in full swing, it’s vital for tax professionals and managers to have the latest information. FBT expert Stephen O’Flynn outlines five things you need to get right with your 2019 FBT returns.
- FBT rate updates
While there have been no major changes to the FBT rules, the following rates have been updated for the 2019 FBT year:
- The cents per km rate for vehicles (other than cars) between zero and 2500cc and vehicles over 2500cc have increased to 54c and 65c respectively.
- The car parking threshold has increased to $8.83.
- The statutory/benchmark interest rate has been reduced to 5.2%.
- The FBT record-keeping exemption threshold has increased to $8,552.
- The housing indexation values for states and territories have been updated.
- Car parking valuations
If you have been using car parking rates advertised online to calculate the taxable value of your car parking fringe benefits, you may not be using the lowest value available. Car parking rate valuers generally have access to cheaper rates than found online.
In general, rates advertised online include various taxes (eg: congestion levy) that inflate the parking rate. Car parking valuers can analyse and exclude these taxes (which are not separately identified) to provide you with a lower daily parking rate.
In practice employers with five or more car parking spaces should consider obtaining a private valuation of their car parking spaces as any reduction in the daily rate would reduce the overall car parking FBT liability.
- Travel expenses
The ATO is yet to finalise draft taxation ruling 2017/D6 which provides guidance on the tax treatment of many common travel expenses. The draft ruling considers when travel expenses such as transport and accommodation would be considered otherwise deductible and, as such, not subject to FBT.
While the ruling is still a draft, the principles discussed in the ruling is an indication of the ATO’s view of the matter and therefore can be referred to when considering whether travel expenses should be treated as being otherwise deductible.
- Contractors and FBT
The Australian Tax Office (ATO) has continued to crackdown on employers incorrectly engaging employees as independent contractors. As it seems to be a focus point for tax authorities, it is important that employers make accurate determinations of whether contractors engaged are in fact genuine contractors or are common law employees. This is because PAYG withholding, superannuation guarantee, and FBT would apply to common law employees.
- Entertainment benefits
Entertainment benefit rules are often misunderstood by both employee and employers. It is an area that can pose both an FBT risk and provide saving opportunities.
It is common for employers to adopt the 50/50 split method for administrative convenience but this method takes away the ability to use the minor and infrequent benefits exemption and the on-premises exemption.
In addition, employers should also be aware of the distinction between sustenance and meal entertainment. If it is sustenance it does not have to be included as an entertainment benefit and you do not have to apply the 50/50 split to them. If in doubt, contact your tax advisor.
Author: Stephen O’Flynn, Director, ShineWing Australia, Technical advisor to Thomson Reuters OneSource FBT
To find out more about what you need for this year’s FBT season, go to tax.thomsonreuters.com.au/onesource/fringe-benefits-tax/ or call us on 1800 074 333.
ONESOURCE: Manage your tax and accounting reporting with integration into your existing systems including excel
Thomson Reuters ONESOURCE™ provides transformative tax technology that powers smarter decisions for tax & accounting professionals worldwide. Backed by our trusted experts, we know where trends in technology are headed — and how tax departments can use them throughout the tax lifecycle.
Discover why Thomson Reuters ® ONESOURCE ™ is the industry’s most powerful corporate tax and accounting technology platform.