The Tax Laws Amendment (2012 Measures No 6) Bill 2012 passed the Senate on 25 June 2013 without amendment and effectively awaits Royal Assent.
The Bill implements the measure announced in the Mid-Year Economic and Fiscal Outlook 2012-13 to remove the concessional FBT treatment for in-house fringe benefits accessed by way of salary packaging arrangements. The changes generally apply to benefits provided on or after 22 October 2012 (the date the changes were announced). However, there are transitional arrangements that will apply to certain salary packaging arrangements that were entered into by the employer and employee before 22 October 2012. [Note the Bill also contains other various miscellaneous amendments.]
The Government said the FBT concessions in the law were not intended to allow employees to access goods and services by agreeing to reduce their salary and wages (through salary packaging arrangements) in order to buy goods and services out of pre-tax income. As a result of the expansion in the availability of salary sacrifice arrangements, the Government said employees were increasingly accessing concessionally taxed fringe benefits under those arrangements and receiving tax-free non-cash remuneration benefits for goods and services. In comparison, the Government said other employees or self-employed persons who acquire these items are required to pay for them out of their after-tax income. Hence, it deemed that changes were necessary.
It would be interesting to see the impact of the changes. Some commentators have speculated that the hardest hit employers are likely to be schools and insurers, as well as retailers utilising card mechanisms to allow employees to salary sacrifice the cost of goods purchased.
Perfectly timed for the mid-year tax return period, The Australian Tax Handbook Tax Return Edition 2013 consolidates major enhancements to ensure that the content is highly relevant, easy to access and practical.