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In House Benefits

2015 FBT Return Seminars

Preparing Your 2015 Fringe Benefits Tax Return seminars  http://tinyurl.com/lpr8sgt

Who should attend?

These full day FBT seminars are designed for people who are responsible for the preparation or review of the FBT return.

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2013 FBT & Salary Packaging Essentials Seminars: Wednesday 9 October in Melbourne & Wednesday 16 October in Sydney – register online at:      http://tinyurl.com/ahzgehb


Reform of salary sacrificed ‘in-house’ fringe benefits

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On 22 October 2012, as part of the Mid-Year Economic and Fiscal Outlook 2012-13, the government announced reforms to remove the concessional fringe benefits tax (FBT) treatment for in-house fringe benefits accessed through a salary packaging arrangement.

The proposed reforms will apply to in-house benefits provided under salary packaging arrangements made on or after 22 October 2012, and from 1 April 2014 for in-house benefits provided under salary packaging arrangements made before 22 October 2012.

In-house fringe benefits arise when employees receive goods or services from their employer or an associate of their employer that are identical or similar to those provided to customers by the employer or an associate of the employer in the ordinary course of business. Under the existing FBT concession, the taxable value of in-house fringe benefits is 75% of either the lowest price at which an identical benefit is sold to the public or under an arm’s length transaction. In addition, depending on the nature of the in-house fringe benefit, the aggregate taxable value may be reduced by a further $1,000.

The existing FBT concession was introduced before the widespread use of salary packaging arrangements. This measure will return the use of this FBT concession to its original intent.

Under the proposed reform, the taxable value of in-house fringe benefits provided through a salary packaging arrangement will be (depending on the nature of the benefit) either:

  • the lowest price that an identical benefit is sold to the public, or
  • the lowest price under an arm’s length transaction.

Legislation was tabled in parliament on 29 November 2012.

Legislation and supporting material

Tax Laws Amendment (2012 Measures No. 6) Bill 2012 and the Explanatory memorandum tabled in parliament on 29 November 2012.

More information

For more information, refer to:

http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/00339112.htm


Your Essential 2013 FBT Return Checklist

Email Katrina for a copy:    katrina.gao@fbtsolutions.com.au

We look at some key checklist questions to consider when preparing the 2013 FBT return, including preparation considerations and technical challenges.  And remember, it’s not what’s in the FBT return that matters, it’s what’s not in the FBT return that matters!

The more NO’s you register on your checklist, then the greater the potential FBT risk.

Firstly, here are our top key FBT Return checklist questions:

  Top FBT Return Checklist Questions

Y/N

1 Are all fringe benefit values inclusive of GST where GST has been   charged?
2 Have you identified all car benefits, whether leased, owned or made   available in some way for the private use of an employee?
3 Have you identified each individual car parking facility that has   been provided to employee’s?This will include owned car parking facilities, leased car parking   facilities or spaces that are available in some other way to the employees
4 In relation to the identified car parking spaces, do you know if   there is a FBT liability?Is there a commercial parking station within 1 kilometre that   charges more than the daily threshold of $7.83 at 1 April 2012?
5 In regards to entertainment expenses, have you identified all   sources of data for entertainment in your organisation?This will include a range of standard FBT sensitive accounts like   meals, employee functions & entertainment, as well as other accounts like   promotions, sponsorships, marketing and business development.
6 For all reportable fringe benefits, have you identified if the   recipient is an employee?Remember, all benefits are reportable unless they’re excluded. Key   exclusions include meal entertainment, entertainment facility leasing, car   parking fringe benefits, pooled or shared cars and exempt benefits.
7 Have you ensured that a signed employee declaration has been   received where a reduction has been claimed in respect of a living away from   home allowance, reimbursement or direct provision?Remember, no declaration, no reduction!
8 Have you ensured that a signed employee declaration has been   received where a reduction has been claimed in respect of the otherwise   deductible rule?

 

General Ledger

A detailed review of the general ledger, whilst time consuming, is usually a necessary end of FBT year task. Here are some key areas to check:

  General Ledger Review

Y/N

1 Where you have identified a fringe benefit, have you checked if GST   was charged when the benefit was acquired?If GST was charged, then it will be necessary to gross up the   benefit value to a GST inclusive amount.Please remember that any overseas GST is not relevant in determining   the gross up factor..
2 Have you identified any deposits or prepaid amounts to ensure that   these are attributed to the correct FBT year?If the amounts are attributable to the next FBT year, then it will   be necessary to note this as a carry forward item.
3 Have you cross checked motor vehicle running expenses against the   listing of car fringe benefits?Running expenses in relation to car fringe benefits are exempt for   FBT purposes. However, reimbursement of car running costs, where the car is   owned or leased by the employee, are subject to FBT.
4 Have you checked for allowance amounts, like “relocation   allowances”, often these amounts are advances or expected amounts to cover a   future or past cost. However, it will be necessary to understand in detail   what these amounts relate to.
5 Have you reviewed training, conference and seminar costs?If the company has hosted conferences or seminars, these should be   reviewed to understand the purpose and activities undertaken. Usually a   review of the agenda and detailed costing’s will assist.

Payroll Review

A review of Payroll codes is a must (and not just limited to FBT).

Also important is the employee name file / transfers / terminations

Here are some key areas to check:

  General Ledger Review

Y/N

1 Where you have identified a fringe benefit, have you checked if GST   was charged when the benefit was acquired?If GST was charged, then it will be necessary to gross up the   benefit value to a GST inclusive amount.Please remember that any overseas GST is not relevant in determining   the gross up factor..
2 Have you identified any deposits or prepaid amounts to ensure that   these are attributed to the correct FBT year?If the amounts are attributable to the next FBT year, then it will   be necessary to note this as a carry forward item.
3 Have you cross checked motor vehicle running expenses against the   listing of car fringe benefits?Running expenses in relation to car fringe benefits are exempt for   FBT purposes. However, reimbursement of car running costs, where the car is   owned or leased by the employee, are subject to FBT.
4 Have you checked for allowance amounts, like “relocation   allowances”, often these amounts are advances or expected amounts to cover a   future or past cost. However, it will be necessary to understand in detail   what these amounts relate to.
5 Have you reviewed training, conference and seminar costs?If the company has hosted conferences or seminars, these should be   reviewed to understand the purpose and activities undertaken. Usually a   review of the agenda and detailed costing’s will assist.

Allowance v reimbursement?

It is important to distinguish between allowances and reimbursements. Allowances are usually taxed under the PAYG rules and reimbursements require consideration from a FBT perspective. Here are some common items that may be considered as allowances and are often confused as being FBT items. Have you considered these?:

  Allowances v Reimbursements

Y/N

1 Cash advances
2 Relocation allowances
3 Cents per km reimbursement
4 Travel allowances
5 Car allowances
6 Housing allowances
7 Cash awards

 

Cars OCM checklist questions:

Whilst use of the Operating Cost Method to value a car fringe benefit usually results in a lower FBT liability, there is more work required to achieve this result. Have you considered the following:

  Cars Operating Cost Method

Y/N

1 Are you sure that all logbooks are valid and current?
2 Do the logbooks clearly state the purpose of each business journey?
3 Is the logbook percentage reasonable given the current role /   responsibilities of each employee?
4 Are all operating costs GST inclusive, where GST has been charged?
5 Does the total operating cost amount for each car look reasonable,   given the value of the car and the period the car was held?

Exempt Cars

The ability to claim exemption for a car requires a high level of comfort on the part of the employer. A key focus area by the ATO.

Exempt Cars

Y/N

1 Do you have a high level of proof for claiming exemption?
2 Do you have a policy on prohibition of private use (other than home   to work and work to home travel)?
3 Are your employees aware of the narrow view that the ATO takes in   relation to minor, irregular and infrequent private use?
4 What undertakings have you received from the employee driver?
5 Do the vehicles qualify as being eligible for exemption?

Cars SFM checklist questions:

The Statutory Formula Method requires the correct base value amount to be calculated, along with correct odometer readings. Have you considered the following:

  Cars Statutory Formula Method Y/N
1 Have you compared closing odometer readings at 31 March 2012 to   opening odometer readings at 1 April 2012?
2 For all new cars, are you confident that the base values for FBT   purposes have been calculated correctly?
3 For cars on the contribution method, are there any excess amounts to   be carried forward from last year?
4 Have you reduce the days available by any days where the car is   unavailable for private use?Does your organisation have policy criteria on what is acceptable as   days unavailable for private use?Have you received a declaration from each employee who has claimed   days unavailable for private use?
5 For cars that existed prior to budget night, have you continued to   use the “old” statutory fraction rates?
6 For cars that existed prior to budget night, and a new commitment   arose post budget night, have you flagged for 2013 that the new statutory   fraction rates will apply?

Car Parking checklist questions

The rules in relation to car parking benefits are complex and require careful consideration. In addition, it is necessary to undertake a car parking rates survey to determine:

  1.  Do you have a FBT car parking liability?; and
  2. To minimise the FBT car parking liability
  Car Parking Y/N
1 Have you identified all parking locations?
2 Has there been any change in business locations during the FBT year?
3 For each location, have you determined if there is a Commercial   Parking Station charging above the daily rate threshold of $7.83 at 1 April   2012?
4 Have you considered if more than one car parking benefit exists for   a single car space?This may occur where you have employees working in shift rotations.
5 Have you identified the lowest daily rates at 1 April 2012 and 31   March 2013?Do you have documentary evidence to support these rates?

Food & Drink that does not constitute Meal Entertainment checklist questions:

  Have you excluded the following from your meal entertainment   calculations? Y/N
1 Snacks, fruit bowls, coffee, tea etc provided on premises and   consumed on premises
2 Morning and afternoon teas – provided on premises and consumed on   premises
3 Light lunches – provided on premises and consumed on premises
4 Birthday cakes / sausage rolls – provided on premises and consumed   on premises
5 Meals consumed by travelling employee. Note that meals consumed by   non-travelling employees or associates of employees will be subject to FBT
6 Meals whilst attending a business conference or seminar

Reportable Fringe Benefits FBT Return checklist questions:

Reportable Fringe Benefits – have you considered the following:

Y/N

1 Have you excluded meal entertainment & entertainment facility   leasing benefits?
2 Have you included recreational or other entertainment?Examples being tickets to sporting & cultural events, holidays   and games of golf
3 Have you excluded car parking fringe benefits?
4 Have you included reportable spouse and other associates benefits   with the employee reportable amounts?
5 Don’t forget, benefits excluded from the reportable requirements may   still be subject to FBT

Want to learn more? 2013 FBT Return Preparation Seminars

Registration form:  http://tinyurl.com/8b64uqw or online at: http://www.cvent.com/d/dcqx6v/1Q

Melbourne 14 March – Sydney 20 March – Brisbane 27 March

 

 


2013 FBT Return Preparation Seminars – Melbourne, Sydney & Brisbane & some key areas to start thinking about

With an unprecedented number of law changes and increased ATO focus, attending one of our 2013 FBT return preparation seminars is an absolute must do. Our 2013 FBT return preparation seminars will be practical and cover the important law changes for LAFHA, Relocations, Cars, Airline Transport Benefits and In-house Benefits, and how these will impact on your 2013 FBT returns.
We will work through the identification and valuation of all benefit categories, and explain what information and documentation is required to claim an exemption, concession or a reduction.
We are holding three full day FBT return preparation seminars in March 2013. Spaces are limited to maximise learning. The dates, locations and registration links are as follows:
Melbourne, Thursday 14 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Sydney, Wednesday 20 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Brisbane, Wednesday 27 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Alternatively, download and print out the registration form here: http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf
Pricing
Early bird – register by 25 January and you only pay $550 including GST.
On time bird – after 25 January, you pay $660 including GST.
Loyal bird – if you or one of your colleagues has previously attended any of our seminars, reduce the applicable fee for each attendee by $55 – that’s our way of saying thank you for your loyalty.

CPD / CPE Hours – 6.5 hours, a certificate in your name will be provided.

Key areas for 2013 FBT Returns
Here are some of the key areas to consider when planning your 2013 FBT return preparation process:

  1. Planning – start the process early, think about the prior year issues and business changes
  2. Prepare a list of updated key contacts – internal and external, and confirm availability
  3. Prepare a timetable of key dates, resources and responsibilities
  4. Law changes – consider the key law changes to LAFHA, relocations, airline transport benefits, cars and in-house benefits. We’ll cover these in detail at the seminars
  5. Car parking – understand where the benefits are being provided, the duration and source the lowest daily rates www.fbtme.com.au – our pricing is competitive, we’ll beat any written quote by 15%.
  6. Training – unless you focus on FBT all year round, then it is recommended that you attend a training session – register here for our full day FBT return preparation seminar: http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf or http://www.cvent.com/d/dcqx6v/1Q
  7. LAFHA – understand who received LAFHA, the start and end dates, the food and accommodation components and who was eligible for the transition
  8. LAFHA – for those employees who are eigible for the transition, check that the accommodation allowance is equal to or less than the actual renatl expense
  9. LAFHA – issue declarations now for those who’s LAFHA ended on 30 September 2012. Let me know if you require a template declaration.
  10. Relocations – pull together a list of employees who relocated, either temporarily or permanently and start understanding the circumstances of their relocation and the    remuneration or reimbursement arrangements
  11. New benefits – were new benefit offerings made in 2012 /13?
  12. Cars – start early to understand the cars outside the SFM transitional rules and ensure logbooks are on file and compliant.
  13. Were there any big parties? Start gathering the detailed costings and understanding the nature of the event/s.

Talk to us about your FBT needs. If you have a query, please let us know.

Yours in FBT,

Paul Mather
Director & Registered Tax Agent
FBT, Payroll & Salary Packaging Solutions
T: 02 8079 2924 F: 02 8249 8101 M: 0403 050 358
E: paul.mather@fbtsolutions.com.au
W: www.fbtsolutions.com.au
A: Level 12, 95 Pitt Street, Sydney NSW 2000
P: PO Box 4508, Sydney NSW 2001