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Month: April 2014

TD 2014/9

Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing on 1 April 2014

Please note that the PDF version is the authorised version of this ruling.

Preamble

 

Exclamation This publication provides you with the following level of protection:This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner’s opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you – provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

 

Ruling

1. This Determination sets out the amounts that the Commissioner considers reasonable under section 31G of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the fringe benefits tax (FBT) year commencing on 1 April 2014.

2. Where the total of food and drink expenses for an employee (including eligible family members) does not exceed the amount the Commissioner considers reasonable, those expenses do not have to be substantiated under section 31G of the FBTAA. Where an employee receives a LAFHA fringe benefit, for the employer to reduce the taxable value of the fringe benefit by the exempt food component, the expenses must be either:

·
 equal to or less than the amount the Commissioner considers reasonable under paragraph 31G(1)(b), or
·
 substantiated in accordance with the requirements in subsection 31G(2).

3. If the total of an employee’s food or drink expenses exceeds the amount the Commissioner considers reasonable, the substantiation provisions under section 31G of the FBTAA will apply.

Reasonable amount for food and drink – within Australia

4. Table 1 below sets out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home within Australia for the FBT year commencing on 1 April 2014. These amounts are for the total of food or drink expenses and include any amounts that may have been allowed for home consumption.

Table 1: Amounts of reasonable food and drink – within Australia

Per week$
One adult 236
Two adults 354
Three adults 472
One adult and one child 295
Two adults and one child 413
Two adults and two children 472
Two adults and three children 531
Three adults and one child 531
Three adults and two children 590
Four adults 590

 

(‘Adults’ for this purpose are persons who had attained the age of 12 years before the beginning of the FBT year.)

5. In relation to larger family groupings, the Commissioner accepts the reasonable food and drink amount based on the above figures plus:

·
 $118 for each additional adult, and
·
 $59 for each additional child.

Reasonable amounts for food and drink – overseas

6. The tables below set out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home outside Australia for the FBT year commencing on 1 April 2014. Table 2 sets out the cost group to which a county has been allocated. Table 3 sets out the reasonable amount for food and drink expenses for each cost group.

7. If the employee lives away from home in a country that is not shown in Table 2 the employee can use the amount for Cost Group 1 in Table 3.

Table 2: List of Countries

If a country is not listed in this table use the amount in Table 3 for Cost Group 1.

For the amounts that apply to each cost group see Table 3.

Country Cost Group Country Cost Group
Albania 2 Estonia 3
Algeria 4 Ethiopia 1
Angola 6 Fiji 2
Antigua and Barbuda 4 Finland 5
Argentina 2 France 5
Austria 4 Gabon 5
Azerbaijan 4 Gambia 2
Bahamas 5 Georgia 3
Bahrain 4 Germany 4
Bangladesh 3 Ghana 3
Barbados 5 Gibraltar 3
Belgium 5 Greece 4
Bermuda 5 Guatemala 3
Bolivia 1 Guyana 3
Bosnia 2 Hungary 3
Brazil 5 Iceland 5
Brunei 2 India 3
Bulgaria 2 Indonesia 3
Burkina Faso 3 Iran 3
Cambodia 2 Ireland 4
Cameroon 4 Israel 5
Canada 5 Italy 5
Chile 3 Jamaica 3
China
(includes Macau & Hong Kong)
5 Japan 5
Colombia 4 Jordan 5
Congo Democratic Republic 4 Kazakhstan 3
Cook Islands 4 Kenya 3
Costa Rica 2 Korea Republic 5
Cote D’Ivoire 4 Kuwait 4
Croatia 3 Laos 2
Cuba 3 Latvia 3
Cyprus 4 Lebanon 4
Czech Republic 3 Libya 3
Denmark 6 Lithuania 3
Dominican Republic 3 Luxembourg 5
East Timor 2 Macedonia 2
Ecuador 3 Malawi 1
Egypt 3 Malaysia 3
El Salvador 2 Mali 4
Eritrea 2 Malta 3
Mauritius 3 Senegal 4
Mexico 3 Serbia 2
Monaco 5 Sierra Leone 3
Morocco 3 Singapore 5
Mozambique 2 Slovakia 3
Myanmar 3 Slovenia 3
Namibia 2 Solomon Islands 3
Nepal 2 South Africa 2
Netherlands 5 Spain 4
New Caledonia 5 Sri Lanka 2
New Zealand 4 Sudan 2
Nicaragua 2 Surinam 3
Nigeria 5 Sweden 5
Norway 6 Switzerland 6
Oman 5 Syria 3
Pakistan 1 Taiwan 3
Panama 2 Tanzania 3
Papua New Guinea 5 Thailand 3
Paraguay 1 Tonga 3
Peru 3 Trinidad and Tobago 5
Philippines 3 Tunisia 2
Poland 3 Turkey 4
Portugal 3 Uganda 2
Puerto Rico 4 Ukraine 3
Qatar 5 United Arab Emirates 5
Romania 3 United Kingdom 5
Russia 6 United States of America 4
Rwanda 3 Uruguay 3
Saint Lucia 3 Vanuatu 4
Saint Vincent 3 Venezuela 5
Samoa 4 Vietnam 2
Saudi Arabia 3 Zambia 3

 

Table 3: Amounts by cost group

Cost Group Food and drink for one adult
1 $137
2 $201
3 $246
4 $310
5 $419
6 $492

 

8. Where the employee is accompanied by other family members while overseas, the reasonable food and drink amount per week for the family is worked out by multiplying the amount shown in Table 3 by the relevant factor in Table 4 below.

Table 4: Factors to apply for family groups – overseas

Family group Factor
Two adults 1.5
Three adults 2.0
One adult and one child 1.25
Two adults and one child 1.75
Two adults and two children 2
Two adults and three children 2.25
Three adults and one child 2.25
Three adults and two children 2.5
Four adults 2.5

 

9. In relation to larger family groups, the Commissioner accepts the reasonable food and drink amounts can be increased:

i.
 for each additional adult by a further 50% of the relevant single adult rate in Table 3; and
ii.
 for each additional child by a further 25% of the relevant single adult rate in Table 3.

Example 1: calculation of reasonable amounts for food and drink – within Australia

10. Jasper, his wife and their two children (both under 12 years of age) temporarily move to Brisbane from Sydney for a period of 5 months (from 1 May 2014 to 30 September 2014; 21 weeks and 6 days) for Jasper to work on a project for his employer. Jasper receives a LAFHA from his employer.

11. Jasper does not need to substantiate his family’s food and drink expenses during the 5 month period if his total expenses do not exceed $10,317 ($472 per week multiplied by 21 6/7 weeks).

12. If Jasper’s family’s total food and drink expenses for the period exceed $10,317, Jasper will have to substantiate all of the expenses incurred, or his employer will be liable to FBT on the amount of LAFHA paid to Jasper that is in excess of $10,317.

Example 2: calculation of reasonable amounts for food and drink – overseas

13. Maria is seconded from Australia to Canada by her employer for 25 weeks, starting work there on 1 April 2014. Maria agrees to temporarily move with her husband and child. Maria receives a LAFHA from her employer for the period of the secondment.

14. Maria does not need to substantiate her food and drink expenses if the total expenses do not exceed $18,325 [$733 per week multiplied by 25 weeks (Table 2 lists Canada as being in Cost Group 5, and using Table 3, the reasonable amount for food and drink is $419 per week. A factor of 1.75 for 2 adults and 1 child is applied to this rate as per Table 4)].

15. If Maria’s total food and drink expenses for the period exceed $18,325, Maria will have to substantiate all of the expenses incurred, or her employer will be liable to FBT on the amount of LAFHA paid to Maria that is in excess of $18,325.

Date of effect

16. This Determination applies to the FBT year commencing on 1 April 2014.

Commissioner of Taxation

16 April 2014

Appendix 1 – Explanation

 

Exclamation This Appendix is provided as information to help you understand how the Commissioner’s view has been reached. It does not form part of the binding public ruling.

 

Background

17. This determination is intended to be read in conjunction with Taxation Determination TD 2013/4. TD 2013/4 sets out the amounts that the Commissioner considers reasonable under section 31G of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the fringe benefits tax year commencing on 1 April 2013. Reasonable amounts were determined for employees within Australia based on the 2009-10 Household Expenditure Survey (HES) conducted by the Australian Bureau of Statistics and indexed to take into account movements in the Consumer Price Index (CPI) since the survey was completed. Reasonable amounts for employees overseas were determined by reference to the annual Taxation Determination which sets out reasonable travel and overtime meal allowance expense amounts. For the FBT year commencing on 1 April 2014 reference is made to Taxation Determination TD 2013/16.

Reasonable amounts for food and drink – within Australia

18. In determining the reasonable amounts for food and drink for substantiation purposes for employees living away from home in Australia, reference was made to the publicly available 2009-10 HES. The HES food and drink expenditure (including alcoholic beverages) for households in the highest income quintile has been adopted. The HES amounts have been indexed to take into account movements in the food sub-group of the CPI since the survey was completed, to determine the reasonable amounts for food and drink for FBT substantiation purposes.

Reasonable amounts for food and drink – overseas

19. As explained more fully in TD 2013/4 the reasonable amounts for food and drink for a LAFHA paid to employees living away from home outside Australia are based on the annual Taxation Determination which sets out reasonable travel allowance amounts. The most recent Determination, which sets amounts for the 2013-14 income year is Taxation Determination TD 2013/16.

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ATO Interpretative Decision

ATO ID 2014/15

Fringe Benefits Tax
Meal Entertainment Fringe Benefit: travel – reimbursement of car parking fees 

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

 

For the purposes of section 37AD of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), are an employee’s car parking fees reimbursed by the employer an expense incurred in providing the employee with travel?

Decision

 

Yes. For the purposes of section 37AD of the FBTAA the car parking fees reimbursed by the employer are an expense incurred in providing the employee with travel as the fees were incurred as part of the employee’s journey.

Facts

 

The employer made an election under section 37AA of the FBTAA that Division 9A of the FBTAA applies in respect of the current FBT year for any meal entertainment fringe benefits that may arise.

During the FBT year the employer provided entertainment by way of food and drink to an employee at a venue away from the employee’s place of employment (the venue).

The employee drove to the venue in his car which he parked in a car park adjacent to the venue.

The employer reimbursed the employee for his car parking fees.

Reasons for Decision

 

All legislative references are to the FBTAA.

Division 9A provides that an employer can elect to determine the taxable value of ‘meal entertainment’ provided by an employer to employees and their associates by one of two methods. These methods are the 50/50 split method or the 12 week register method.

For the purposes of Division 9A, section 37AD defines the expression ‘provision of meal entertainment’ as:

 

   A reference to the provision of meal entertainment is a reference to the provision of:

(a)
 entertainment by way of food or drink; or
(b)
 accommodation or travel in connection with, or for the purpose of facilitating, entertainment to which paragraph (a) applies; or
(c)
 the payment or reimbursement of expenses incurred in providing something covered by paragraph (a) or (b);

 

whether or not:

(d)
 business discussions or business transactions occur; or
(e)
 in connection with the working of overtime or otherwise in connection with the performance of the duties of any office or employment; or
(f)
 for the purposes of promotion or advertising; or
(g)
 at or in connection with a seminar.

The employer provided the employee with entertainment by way of food and drink. Therefore, the employee was provided with meal entertainment for the purposes of paragraph 37AD(a).

The question arises as to whether the car parking fees reimbursed by the employer are an expense incurred in providing travel. ‘Travel’ is not defined in section 37AD.

Relevantly, the Macquarie Dictionary, Sixth Edition, 1 October 2013, defines ‘travel’ as:

 

   1. To go from one place to another; to make a journey; to travel for pleasure

The term ‘journey’ is defined as:

 

   1. A course of travel from one place to another especially by land.

The relevant journey undertaken by the employee in connection with the provision of the entertainment by way of food or drink was the journey from his home to the venue.

The car parking fees were incurred as part of the employee’s journey.

Accordingly, the car parking fees reimbursed by the employer are an expense incurred in providing the employee with travel for the purposes of section 37AD.

Date of decision: 14 April 2014

Year of income: Years ended 31 March 2013 and 2014

 

Legislative References:
Fringe Benefits Tax Assessment Act 1986


FBT clients who lodged late in 2013

We are sending a reminder to taxpayers who lodged their 2013 fringe benefits tax return late, or are yet to lodge, to ensure they are ready to lodge on time this year.

http://ato.gov.au/Tax-professionals/News-and-updates/Latest-updates/FBT-clients-who-lodged-late-in-2013/

Published: 28/02/2014

 

 

Reminder letter to be sent to FBT clients who lodged late in 2013

You told us that it can be difficult to lodge fringe benefits tax (FBT) returns on time if your clients do not provide you with the necessary information.

We are writing to taxpayers who lodged their 2013 FBT returns late, or are yet to lodge, to remind them of their obligations for this year. Some of these taxpayers may be your clients.

The letter will advise taxpayers:

  • to get their FBT information from their salary packaging or leasing firms as soon as possible
  • to provide their tax agent with all of the information by the end of April (to allow agents to complete their return, lodge it on time and avoid penalties).

We anticipate this letter will help to ensure that agents can meet the 85% on-time performance benchmark when lodging their clients 2013–14 FBT returns.

If an agent fails to lodge 85% of their clients FBT returns on-time for this year, they will not have access to the lodgment program FBT concessional due date for the following year, until the performance benchmark is reached.