Some common errors when assessing the liability to FBT on car parking:
- FBT levied against the actual cost or amount paid by the employer for their parking space
- Taxable value is not the amount paid for each space under a lease or terms of a building lease
- Calculations and terminology can be complex resulting in incorrect FBT calculations
- Measuring of 1 km where multiple employer provided parking sites
- Lease in employee name will constitute an expense payment fringe benefit
- Car parking is not a reportable fringe benefit
- Not undertaking a survey
We can help you by checking if you have a liability to car parking FBT, and if you do, we can help you to minimise that liability.
Go to www.fbtme.com.au
Have you historically paid too much FBT on your car parking fringe benefits?
This commonly happens in these circumstances:
- Used an average daily rate higher than the lowest available?
- Based the FBT liability on the cost of the parking?
- Used the Type 1 gross up up rate on owned parking
If any of the above apply, then talk to us at www.fbtme.com.au
Under the self assessment FBT system, the ATO will approve your refund.
As an added bonus, you may not have to amend employee reportables (will be dependent on the original treatment adopted in the lodged FBT return).
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 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.
We have been receiving a lot of queries on car parking fringe benefits, the liability to FBT and the calculation of the FBT liability.
Here are a few key points to be aware of:
- In determining if you have a liability to FBT on car parking, you need to undertake a survey as at 1 April 2011 to determine if there is a commercial parking station within the 1 kilometre radius (distance) that charges above the daily rate threshold of $7.71
- If you have a liability to FBT on your car parking, then under the average cost valuation method, you identify the lowest rates at 1 April 2011 and 30 March 2012 (31 March 2012 was a Saturday)
- The lowest rates you identify at those two dates do not have to be from the same commercial parking station
- Care needs to be taken when checking the rates as they must be representative
- The rates used must be GST inclusive
It’s a tricky area, if you need a hand, go to www.fbtme.com.au