FBT Solutions

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LAFHA

www.fbtsurvival.com.au

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The site contains key FBT documents, past training materials, checklists, LAFHA food rates and key ATO source materials

 


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

 

 


Frequently overlooked fringe benefits

1.PR costs – application + consulting fee
2.Spouse / family travel
3.Meals provided to non travelling employees
4.Meals provided to non travelling clients
5.Meals provided to non travelling spouses (incl. clients)
6.Health insurance
7.Taxi from “non place of work” to home
8.Visa renewals
9.LAFHA Food – statutory amounts
10.NEW FOR 2013 – Temporary Accommodation

GST & Income Tax issues with 3, 4, 5 & 7


In light of the recent legislative changes, developing a policy for LAFHA & Relocations policy is not an easy task. Here’s a few key points I hope will help.

The following require consideration:

1.            The application or not of the transitional rules (generally only applies to permanent residents)

2.            In relation to accommodation, the substantiation requirements are such that it will be necessary to obtain evidence of actual payment

3.            Where the accommodation allowance is greater than the actual expense, the excess is subject to FBT

4.            Contracts will need to clearly show the split between accommodation & food components

5.            Where the food component is greater than the ATO reasonable amounts, it will be necessary to obtain full substantiation from the employee

6.            Where the food component is greater than the ATO reasonable amounts, it is recommended that the excess be categorised as an incidental allowance

7.            Where the accommodation component is greater than the actual expense, it is recommended that the excess be categorised as an incidental allowance

In regards to declarations, whilst these will be required, it will also be necessary to obtain substantiation for the accommodation expenses and possibly the food.

 


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


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