FBT Solutions

02 8079 2924

Policy



2013 FBT Update Seminar – LAFHA changes, ATO focus & Salary Packaging

Our 2013 FBT Update Seminar Series covered the important LAFHA changes, changes in Car rules and the tricks & traps in identifying and valuing car parking fringe benefits.

In addition we covered the broad range of Salary Packaging offerings to the full extent of the FBT law.

Download a copy of the FBT Update Seminar slides here:

http://www.fbtsurvival.com.au/wp-content/uploads/2013/02/2013-FBT-Update-Seminar.pdf

For more important FBT material, go to www.fbtsurvival.com.au

If you have any questions on the topics covered, please email us at info@fbtsolutions.com.au or call us on 02 8079 2924.


Check out our FBT Survival Kit website, a great source for FBT checklists, FBT return & FBT update seminar materials, employer & employee elections & declarations and much more…. www.fbtsurvival.com.au

Living Away From (LAFH) allowances and benefits

http://www.fbtsurvival.com.au/wp-content/uploads/2013/02/LAFH-declarations.pdf

 


Cars in transition and under attention

Cars usually represent the biggest risk area for employers. With a continuing and elevated level of attention from the ATO, management of cars from a FBT perspective must always be a priority.

Car reform & transition

Whilst the car reforms commenced back on 10 May 2011, we mustn’t lose sight of the transitional rules and these will require continued monitoring through until 1 April 2014 when the flat rate of 20% applies. Therefore, only two FBT return periods (2013 & 2014) remain where employers (and employees) will need to worry about such things as odometer readings and annualising of kilometres when valuing the car benefit using the statutory formula method (SFM).

Cars provided prior to 10 May 2011, or where a pre-existing commitment was in place to prior to that date, will continue to use the old statutory fractions unless there has been a change in commitment. Changes made after 10 May 2011 to commitments existing prior to 10 May 2011, such as re-financing a car, altering the duration of an existing contract or changing employers, are new commitments and will therefore be subject to the new arrangements. Under the transitional rules, if the amendments (new commitments) do not apply at the start of an FBT year (or from the time the car was first held if that happens after the beginning of the FBT year), the amendments will instead begin to apply from the start of the next FBT year as follows:

 

Thresholds

 

Old   rates

New   rates after 10 May 2011

 

2012

2012

2013

2014

2015

0 – 15,000 kms

26%

20%

20%

20%

20%

15,000 – 25,000 kms

20%

20%

20%

20%

20%

25,000 – 40,000 kms

11%

14%

17%

20%

20%

More than 40,000 kms

7%

10%

13%

17%

20%

Therefore, the key point is that whilst a car may be subject to the new rates, the application of the new rate may not occur until the first day of the next FBT year. This requires the 2013 FBT return preparers to flag these changes for the 2014 FBT return. And hopefully, this requirement has been flagged by the 2012 FBT return preparer for the 2013 FBT return. Use of annual rotation of the FBT return preparer can often lead to confusion.

When preparing your 2013 FBT return, the choice of rates will depend upon whether the old grandfathered rates continue to apply as a pre 10 May 2011 contract or if the car is included in the new transitional rates. The table below illustrates:

Thresholds

Grandfathered Rates

Transitional Rates

0 – 15,000 kms

26%

20%

15,000 – 25,000 kms

20%

20%

25,000 – 40,000 kms

11%

17%

More than 40,000 kms

7%

13%

ATO focus

Cars are the single largest FBT revenue item for the Government (although LAFHA may well challenge for the title in 2013!). As mentioned, cars remain a major ATO focus. The ATO are targeting cars on a number of fronts….

Luxury cars and use of logbook

The ATO have focussed closely on the use of log books in general but particularly in respect of luxury vehicles, especially high end luxury sports cars.

Exempt cars

The ATO have undertaken a campaign targeting employers who have claimed exemption for vehicles and are not lodging FBT returns. There exists a general lack of understanding on the application of car exemptions and often this is due initially to lack of clear policy and then poor compliance procedures. It is an area that requires careful management as cars are highly visible benefits and their related costs run clearly through the financials.

Employee contributions project

ATO analysis has identified that a high percentage of employers who report employee contributions in their FBT returns with the effect of reducing the taxable value of benefits, are failing to report those employee contributions as assessable amounts in their income tax returns and related GST liabilities in the periodic BAS.

The ATO has been issuing letters to employers where the ATO has identified discrepancies between Income Tax Returns and FBT Returns. The ATO are reminding employers of their responsibilities with contributions and that they must be reported as income in the correct label on the income tax return. If the employer has not reported the income then an amended return will be necessary.


Would you like to know how affordable FBT Outsourcing is?

Please complete the form

TO FIND OUT

How many employing entities do you have in Australia? (i.e. how many Australian FBT returns do you lodge?)

Are your FBT returns reviewed externally prior to lodgement?

Do you currently use FBT software to prepare your FBT return/s?

How many employing entities do you have in New Zealand? (i.e. how many New Zealand FBT returns do you lodge?)

GREAT!

We will send you a fee estimate via email (within 72 hours).