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FBT talk for February

Fringe benefits tax (FBT) is paid by employers on certain benefits they provide to their employees or their employees’ family or other associates. FBT applies even if the benefit is provided by a third party under an arrangement with the employer. Let us discuss the big 4 of FBT:

Big 4 of FBT:

Every organization is different regarding the types of benefits provided and the extent to which benefits are provided – whether directly or via salary packaging arrangements. In our experience, the Big 4 benefit categories are:

  • Motor Vehicles.
  • Car Parking.
  • Entertainment
  • Relocations (including Travel, LAFHA, Remote Area and Expatriates).

So what makes each of these benefit categories so special, or challenging? Below we analyse each category and give our thoughts.

1. Motor Vehicles:

Motor vehicles often comprise a significant percentage of an organization’s FBT liability, hence the desire to reduce the FBT liability. The FBT technical rules in relation to Motor vehicles are complex, and often practically difficult, when seeking to reduce the taxable value, whether by:

  • One third reduction
  • Employee contribution
  • Claiming days unavailable
  • Logbook records; or
  • Claiming exemption

When reducing the taxable value (for any benefit category) the reduction must be fully supported and documented.

More recently the ATO has released concessional Practical Compliance Guidelines (PCG) in relation to Logbook and claiming an exemption for Tool of Trade and Work-related vehicles. These PCG’s themselves contain a level of complexity and strict requirements to avail the concession and associated reductions.

Motor vehicles remain a key focus area by the ATO through the scrutiny of claiming Motor Vehicle expenses, double-dipping on Novated Lease car expenses, GST & Depreciation on luxury cars, Logbooks, claiming Exemption, correct Valuation choice or correctly reporting Employee Contributions for FBT, GST and Income Tax purposes.

2. Car Parking:

The car parking rules are undergoing significant reform – with the ATO proposing to broadly treat a car park that offers all-day parking (being at least six continuous hours between 7am and 7pm) as a “commercial car parking station” for FBT purposes. This is the case even where the car park’s fee structure may discourage parking for that length of time by charging a much higher penalty fee. Examples include shopping center car parks and car parks adjacent to hospitals and airports. Importantly, new online car parking operators are included as providing commercial car parking even where only a small number of spaces are offered.

The impact of these changes, for employers who provide employee car parking facilities within 1 kilometer of such a car park, is that they may have to pay FBT on the car parking – in the past, rightly or wrongly, this may not have been the case.

Car parking is a complex benefit with multiple counting and valuation methodologies potentially available. It is probably the most misunderstood benefit and probably the benefit that is most easily “ignored” for FBT purposes due to the complexity. These changes by the ATO will remove some of the complexity.

Finally, coupled with these FBT changes is an increased focus by the ATO on the use of market valuation methods. In particular, the ATO is concerned that valuers have prepared valuation reports using a daily rate that doesn’t reflect the market value. As such, the taxable value of the benefits is significantly discounted or in some cases even to nil.

The ATO is calling on employers and their accountants to understand that there exists a responsibility to confirm the basis on which valuations are prepared and to understand that engaging an arm’s-length valuer does not mean they have met all the requirements for working out the taxable value of their car parking fringe benefits.

The ATO is putting the onus back on employers in considering if a valuation is a valid assessment. The ATO has further stated that the minimum requirements for a market valuation report include:

  • the date of the valuation,
  • the precise description of the location of the car parking facilities valued,
  • the number of car parking spaces valued,
  • the value of the car parking spaces based on a daily rate,
  • the full name of the valuer and their qualifications,
  • the valuer’s signature, and
  • a declaration stating the valuer is at arm’s length from the valuation.

3. Entertainment:

Always the biggest challenge comes FBT time! Distinguishing between Meal Entertainment and deductible meals can be difficult – there is the reliance on the employees to provide the correct description, documentation, and details (who attended and what is their relationship to the company)

The requirement to separate between Meal Entertainment, Entertainment Facility Leasing, and Recreational Entertainment. For each category of entertainment it is necessary to decide how to value, can the minor benefit be applied and do we need to report on employee payment summaries.

Finally, we need to ensure our FBT, GST and Income Tax treatment are consistent! 

4. Relocations (including Travel, LAFHA, Remote Area & Expatriates): 

Did you know that Relocations are the most popular topic for seeking ATO advice by way of Private Binding Rulings?

This is because relocations are an FBT area that is not necessarily specific to a benefit category but is analyzed based on an individual employee’s circumstances. Depending on the employee’s circumstances, there are a number of scenarios (and FBT exemptions and concessions) that may apply, as follows:

  • Business Travel
  • Personal Travel
  • Mix of Business and Personal Travel
  • Temporary Relocation
  • Permanent Relocation
  • Fly in Fly Out
  • Remote Area residence
  • Temporary Resident (Expatriate)

In addition, the ATO has released two draft public rulings in relation to Employee Travel expenses – these rulings whilst subject to finalization, provide a degree of uncertainty.

We hope the above gives you an understanding of why we think the above are the Big 4 of FBT.

How does our thinking apply to your organization?

2020 FBT Training – Workshops, Webinars and In-house Training

We are running full day 2020 FBT workshops and online webinars in March 2020, providing you and your team with the knowledge and tools to efficiently and effectively prepare the 2020 FBT return.

2020 FBT Workshops

The locations and dates for the 2020 FBT Return Workshops are as follows:

Sydney: Thursday 5 March 2020               

Perth: Tuesday 10 March 2020                    

Adelaide: Thursday 12 March 2020             

Brisbane: Tuesday 17 March 2020           

Melbourne: Thursday 19 March 2020       

Canberra: Tuesday 24 March 2020           

Sydney: Thursday 26 March 2020 (2nd day)    

For more information and to register, please click here: 2020 FBT Workshops

2020 FBT Webinars

Get ready for FBT 2020 by attending one or more of our 90 minute webinars, live or recording. There are 7 in total to choose and each FBT webinar is a deep dive into the technical and practical issues, as well as relevant changes, ATO focus, and war stories. 

All the big FBT & Salary Packaging topics (including the Big 4 discussed above) will be covered with Q&A time included. Here are the summary details for each webinar. Please click on Register for more details:


FBT 2020: Car Parking – New Rules & ATO Compliance Activity: 

Wednesday 12 February 2020, 1pm to 2:30pm (AEST)  Register 


FBT 2020: Salary Packaging Essentials: 

Wednesday 19 February 2020, 1pm to 2:30pm (AEST)  Register


FBT 2020: Entertainment Expenses and FBT: 

Wednesday 4 March 2020, 1pm to 2:30pm (AEST)  Register


FBT 2020: Cars and Exemptions: 

Wednesday 11 March 2020, 1pm to 2.30pm (AEST)  Register


FBT 2020: Relocations, Remote Area, LAFHA and FBT: 

Wednesday 18 March 2020, 1pm to 2:30pm (AEST)  Register


FBT 2020: FBT Return Update Essentials: 

Wednesday 25 March 2020, 1pm to 2:30pm (AEST)  Register


FBT 2020: FBT Reporting for the Not-for-Profit Sector: 

Wednesday 8 April 2020, 1pm to 2:30pm (AEST)  Register


2020 FBT – In-house Training

In addition to full-day Workshops and Webinars on FBT and Salary Packaging, we also offer in-house training for you and your team.

In-house training provides an opportunity to focus specifically on the benefits your organization provides together with an understanding of the policies, processes, and documentation required.

We work with you to design the agenda and content, and allow you and your team to drive the training ie we can focus more or less on certain topics as required.

Recent in-house training sessions we have delivered include Preparing your FBT Return, Managing mobile employees, the Employee Expense Process & Entertainment, Implementing Salary Packaging and implementing FBT Policies and Processes.


FBT 2020 Workshops

 

Get in quick as seats are booking out! 

Our full day workshop are designed to help you and your colleagues to prepare the 2020 Fringe Benefits Tax (FBT) return and 2020 Reportable Fringe Benefits amounts with maximum confidence and minimum fuss.

Jointly run by CCH Learning and FBT Solutions, our interactive workshops bring together the practical guidance, support and tools you need to sail through the 2020 FBT season.

First Release $495.00 – SOLD OUT!

Second Release $575.00 – ON SALE NOW!

Final Release $645.00 


2020 FBT Return Preparation Full Day Workshops


Sydney: Thursday 5 March 2020 (1st day)



Perth: Tuesday 10 March 2020



Adelaide: Thursday 12 March 2020



Brisbane: Tuesday 17 March 2020



Melbourne: Thursday 19 March 2020



Canberra: Tuesday 24 March 2020



Sydney: Thursday 26 March 2020 (2nd day)



 

Who should attend?

All personnel involved in the preparation or review of the 2020 FBT return, whether new to FBT or those requiring refresher training. This includes Tax Accountants, Financial Accountants, Payroll Managers and Staff, HR Managers and their teams.

What can you expect?

A comprehensive update on the FBT changes for 2020 including:

  • Recent law and ATO changes
  • Overview including Type 1 and Type 2 benefits and employee contributions
  • How to prepare the 2020 FBT Return form
  • Special rules for Exempt and Rebatable Employers
  • Motor vehicles valuation using either statutory formula method and operating cost or logbook method
  • Motor vehicle exemptions
  • Car parking benefits including new ATO guidance
  • Meal Entertainment, Recreational Entertainment and Entertainment Facility Leasing
  • Tax Exempt Body Entertainment
  • Temporary and Permanent Relocations / LAFHA v Travel / Remote Area / Expatriates
  • Expense Payments, Property benefits, Residual benefits
  • Exemptions and Concessions
  • ATO audit activity
  • Employer elections and declarations
  • Employee declarations
  • Employee reportable fringe benefits amounts (RFBA)
  • Post Lodgment requirements

You will receive guidance on how to prepare the 2020 FBT return and:

  • Learn how to identify and value all benefits
  • Work through the valuation methodologies for all benefit categories including Cars, Car Parking, Entertainment, Temporary & Permanent Relocations, Living Away From Home, Remote Area, Employee Expenses and Property
  • Gain an understanding of the key documentation requirements for claiming reductions, concessions and exemptions
  • How to avoid the most common mistakes that organisations make
  • Discover ways that you can achieve real savings and reduce the tax liability for your organisation

Attendees will be provided with:

  • A detailed 2020 FBT Technical Manual
  • Our 2020 FBT Planner Checklist
  • Our 2020 FBT Essentials Checklist
  • An attendance certificate for CPD/CPE purposes (6.25 hours)
  • Lunch, morning & afternoon tea
  • Opportunities to network with your peers and fellow FBT-preparers over lunch

Registrants also receive the following special offers:

  1. Free access to the FBT Query service until 30 June 2020 – the sooner you register, the sooner you’ll have access to this valuable service from FBT Solutions
  2. A free Fleet and FBT optimisation review
  3. A free Salary Packaging review
  4. Preferential pricing for the FBT Solutions car parking valuation service

Presenter Bio:

Paul Mather, Founder of FBT Solutions. Paul has over 20 years hands-on, practical experience preparing, reviewing and lodging FBT returns. Paul is a current member of the ATO’s FBT Working Group and was a member of the former Australian Taxation Office National Tax Liaison Group (NTLG) Fringe Benefits Tax Subcommittee from 2005 to 2013. An accomplished trainer and speaker, Paul delivers his topic in a practical and insightful manner.

These FBT 2020 Workshops are running in 6 locations – Sydney (2 dates), Melbourne, Perth, Brisbane, Adelaide, and Canberra.  

 


Salary Packaging remains a popular remuneration strategy for many employers. However, many employers, and more importantly their employees, are missing out on the opportunity provided by Salary Packaging.

Salary Packaging provides a key solution to offering flexible remuneration to your employees, by providing employees with a pay increase at no additional cost to the Employer. For FBT exempt and rebatable employers, Salary Packaging remains a key policy component of remuneration.

The application of the FBT rules will be explained in detail. Key benefits covered in this webinar include Cars, Car Parking, and Relocation, LAFH benefits, Remote Area benefits and other Exempt Benefits.


FBT 2020: Salary Packaging Essentials: Wednesday 19 February 2020, 1pm to 2:30pm (AEST)

Salary Packaging remains a popular remuneration strategy for many employers. However, many employers, and more importantly their employees, are missing out on the opportunity provided by Salary Packaging.

Paul will highlight best practice process, common errors and dispel the many myths.




Webinar Learning Outcomes:

By attending the webinar, attendees will be provided with an understanding of salary packaging cars and a variety of other benefits. Guidance will be provided on what can and cannot be packaged, and the various valuation and structuring methods available. The webinar assists attendees in understanding the concept of salary packaging and how to maximize the benefits of salary sacrificing for employers and employees. Providing practical knowledge to assist in managing and understanding the salary packaging of cars and other benefits, the webinar covers the following:

  • Understand the concept of salary packaging
  • Determine the requirements for an effective salary sacrifice arrangement
  • How to salary package
  • Calculation examples showing the effect on after-tax income for various income levels
  • Comparison of Pre-tax FBT method and Post-tax contribution method for Cars and Car Parking
  • Comparison of Statutory formula method and Logbook method for Cars and Car Parking
  • Salary packaging arrangements for different employer types

Salary Packaging of:

  1. a) Cars
  2. b) Car Parking
  3. c) Relocation & LAFH benefits
  4. d) Remote Area benefits
  5. e) Portable Electronic Devices including Laptops / Tablets
  6. f) Airline Lounge Memberships
  7. g) School Fees (Expatriates)
  8. h) Mortgage, Rent, Credit Cards
  9. o) Understand the key challenges

Suited to:

This webinar is suited to those in practice or corporate roles, from beginners to advanced, those involved in FBT reporting or management/policy of salary packaging, including:

  • Tax agents and tax advisors
  • Accountants in Public Practice
  • Tax Accountants
  • HR Personnel (from officers to General HR Managers)
  • Payroll Accountants
  • Payroll Managers and their teams
  • Finance Managers
  • Financial Accountants
  • Management Accountants
  • Tax Managers
  • Fleet Managers
  • Salary Packaging Managers

Presenter Bio:

Paul Mather, Founder, and Director of FBT Salary Packaging Solutions has over 20 years hands-on, Salary Packaging and FBT experience. Paul is a current member of the ATO’s FBT Working Group and the ATO’s Small Business Liaison Group. Paul was a member of the former Australian Taxation Office National Tax Liaison Group (NTLG) Fringe Benefits Tax Subcommittee from 2005 to 2013. An accomplished trainer and speaker, Paul delivers his topic in a practical and insightful manner.

You will be provided with: 

  • PowerPoint presentation slide deck
  • Supporting documentation
  • Webinar Recording to view multiple times for up to 6 months
  • Q&A Session and the presenter’s contact details for follow up questions

 


The ATO has signaled significant reform of the FBT car parking rules, together with increased FBT audit and compliance focus. This webinar will provide a detailed analysis of the new and existing FBT rules as they apply to car parking including alternate valuation methodologies and application of the concessions and exemptions.

In this webinar, we will focus on the key FBT rules, areas of risk for car parking, and ways to reduce an employer’s FBT cost. We will cover the current areas of ATO concern and consultation including the definition of a commercial parking station, the new car parking operators causing disruption and car parking market valuation. Attendees will be given an understanding of the key areas to focus on for managing FBT, planning strategies and policy implementation. Paul will highlight common errors and dispel many myths.

The FBT car parking rules are complex and require careful consideration to ensure compliance and to maximize savings. This webinar will provide you with a clear understanding of the rules governing car parking fringe benefits, the steps required to ensure compliance and strategies to minimize FBT liabilities.


FBT 2020: Car Parking – New Rules & ATO Compliance Activity: Wednesday 12 February 2020, 1pm to 2:30pm (AEST)

The ATO have signalled significant reform of the FBT car parking rules, together with increased FBT audit and compliance focus. This webinar will provide a detailed analysis of the new and existing FBT rules as they apply to car parking including alternate valuation methodologies and application of the concessions and exemptions.

Paul will highlight best practice process, common errors and dispel the many myths.




Webinar Learning Outcomes:

  • A clear understanding of how to determine if an FBT liability for employer-provided car parking exists.
  • The new ATO ruling and the detailed guidance contained in the revised Chapter 16 Employer Guide.
  • The ATO issue with market valuation method.
  • Recent ATO audit activity on car parking.
  • A process for identifying if taxable car parking is provided.
  • A detailed explanation of the 3 methods available for counting the number of car parking benefits.
  • A detailed explanation of the 3 methods available for valuing car parking benefits.
  • Key solutions for minimizing FBT liabilities.
  • Common errors and dispelling the many myths associated with car parking & FBT.

Suited to:

This webinar is suited to those in practice or corporate roles, from beginners to advanced. As well as anyone involved in FBT reporting for car parking or those tasked with managing motor vehicles & employee parking from an operational or policy perspective including:

  • Tax agents and tax advisors
  • Accountants in Public Practice
  • Tax Accountants
  • HR Personnel (from officers to General HR Managers)
  • Payroll Accountants
  • Payroll Managers and their teams
  • Finance Managers
  • Financial Accountants
  • Management Accountants
  • Tax Managers
  • Fleet Managers
  • Salary Packaging Managers

Presenter Bio:

Paul Mather, Founder and Director of FBT Salary Packaging Solutions has over 20 years hands-on, Salary Packaging and FBT experience. Paul is a current member of the ATO’s FBT Working Group and the ATO’s Small Business Liaison Group. Paul was a member of the former Australian Taxation Office National Tax Liaison Group (NTLG) Fringe Benefits Tax Subcommittee from 2005 to 2013. An accomplished trainer and speaker, Paul delivers his topic in a practical and insightful manner.

You will be provided with: 

  • PowerPoint presentation slide deck
  • Supporting documentation
  • Webinar Recording to view multiple times for up to 6 months
  • Q&A Session and the presenters contact details for follow up questions

 


Summary – What this draft Ruling is about:

  1. This draft Ruling sets out when an employee can deduct transport expenses under section 8-1 of the Income Tax Assessment Act 1997. This includes the cost of travel by airline, train, taxi, car, bus, boat or another vehicle.
  2. This Ruling explains that transport expenses incurred for ordinary travel between home and a regular place of work are not deductible. In contrast, transport expenses incurred by an employee is traveling between work locations usually are deductible. This Ruling also explains a number of special cases or exceptions to these general rules.
  3. This Ruling also applies for the purposes of the Fringe Benefits Tax Assessment Act 1986in determining whether such expenses paid by the employer would have been ‘otherwise deductible’ if incurred by the employee.
  4. This Ruling does not address:
  • The substantiation of transport expense.
  • Transport expenses related to self-education or study – refer to Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in the business.
  • The deductibility of parking fees.
  • Employees carrying out itinerant work – refer to Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work – deductions, allowances and reimbursements for transport expenses..
  • Fringe benefits tax generally, except for the application of the ‘otherwise deductible’ rule.
  1. An employee can only deduct a transport expense under section 8-1 to the extent that:
  • They incur the expense in gaining or producing their assessable income[4]
  • The expense is not of a capital, private or domestic nature
  • The applicable substantiation requirements satisfied.
  1. For an expense to be incurred ‘in’ gaining or producing an assessable income it is both sufficient and necessary that the occasion of the expense should be found in whatever is productive of the assessable income.
  2.  Deductibility of transport expenses – general principles
  3. Where the occasion of transport expenses can be found in the employee’s employment duties, the expenses will be incurred in gaining or producing the employee’s assessable income.
  4. It has long been established that the term ‘incurred in gaining or producing assessable income’ is understood as meaning incurred ‘in the course of gaining or producing’ assessable income. Other ways that this has been expressed in the context of transport expenses, is that the employee is traveling ‘on work’, the travel is part of the employment the travel is an incident of the employment.
  5. When the final Ruling is issued, it is proposed to apply both before and after its date of issue. However, the Ruling will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling. To the extent that there is any conflict between the final Ruling and draft Ruling TR 2017/D6, the Commissioner would have regard to the earlier draft in deciding whether to apply compliance resources in income years to which the earlier draft applies.

For further details refer ATO