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Month: March 2012

The ATO commenced a series of LAFHA FBT audits last year. Here are the types of questions they asked:

1.Do you have a Living Away From Home policy?
2.Who is responsible for the Living Away From Home policy in your organisation?
3.Who in your organisation decides if an employee is eligible for Living Away From Home Allowance?
4.Who in your organisation determines the amount of Living Away From Home Allowance?
5.Who in your organisation determines the accommodation and food components?
6.Who in your organisation calculates the exempt component?
7.What records are maintained to substantiate the Living Away From Home Allowance being paid?
8.What responsibility, if any, does the employee in receipt of the Living Away From Home Allowance have?
9.Do you undertake regular reviews of each employee’s Living Away From Home status?
How confidently could you, your HR manager, Payroll manager or Tax manager answer the above questions?

3 areas of FBT exemptions and concessions to consider:

Step 1 – Relocation costs

Storage and removal of goods

Relocation transport including familiarisation trips

Connection of utilities

Relocation consultant

Step 2 – Temporary accommodation

Up to 12 months free of FBT

Step 3 – Sale of former residence / purchase new residence

Exemption for stamp duty and incidental selling & acquisition costs

Car parking is an excellent benefit to package for a number of reasons:

1.The cost of packaging in virtually all cases will result in increased take home pay for the employee.
2.For employees of exempt and concessional taxed employers, the savings will be even greater.
3.Small business exemption
4.Parking related to Fly in / fly out arrangements are exempt
5.Combine the packaging of a car and a car park – FBT savings can be generated for both by recording “no benefit” days on the same documentation.
6.The employer claims the GST and only charges you the GST exclusive cost.
7.Car parking is a concessionally taxed fringe benefit.
8.If your employer provides the parking outside the vicinity of where you work, then the parking may be FBT free.
9.If where you work is outside the main CBD area, then the parking may be FBT free.
10.Use of the after tax contribution method will generally give rise to even greater employee savings.
11.The FBT law allows for a number of valuation methodologies – choose the one that fits your work lifestyle.


With the new rates applicable from 10 May 2011, subject to transitional rules, it is necessary for the FBT return preparer to determine for each car:

  1. What set of statutory fraction rates apply for 2012
  2. What set of statutory fraction rates will apply from 1 April 2012 due to a new committment occurring in 2012

This will be quite a challenge, not just for 2012, but for 2013 and 2014 FBT years.

For all new committments (between 11 May 2011 and 31 March 2012), then the new transitional will only start to apply from 1 April 2012.

With the FBT year end upon us, it’s time for employers to start thinking about managing their FBT liability on car parking provided to their employees. The following steps need to be considered:

Step One – Confirm all parking facilities

The first step is to confirm all parking locations, whether leased, owned or otherwise provided. The biggest risk for employers is not identifying the benefits.

Step Two – Identify the number of individual benefits

For each location, identify the number of spaces, and the date a benefit has been first provided and last provided in the FBT year.

Step Three – Perform a valuation survey to determine if a car parking fringe benefit exists

A car parking fringe benefit will only exist if a commercial car parking station, within a 1km radius, charges above the threshold of $7.71 for 2012 at 1 April 2011.

Step Four – Determine the number of benefits

The most common method for determing the number of benefits is to use the statutory formula method which deems there to be 228 days where a benefit is provided in a full FBT year (pro-rata for a part year). If you haven’t considered before, seriously contemplate use of the 12 week register method for car parking.

Step 5 – Value the benefit

The average cost method is the easiest and most common method. However, it is necessary to perform a valuation survey at both 1 April 2011 and 31 March 2012. As the latter is on a Saturday, it will be necessary to undertake the survey on Friday 30 March.

Make it easy and order here: http://www.fbtme.com.au/order.html

Step 6 – Calculate the FBT liability and complete the FBT return

Step 7 – Consider if you’ve paid too much FBT historically? Under the self assessment system, employers have the right to claim FBT refunds going back 3 years.