The ATO’s new ruling on Car Parking and FBT TR2021/2 has been released to reflect contemporary commercial car parking arrangements and legal developments including the Federal Court decisions in Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168 and Virgin Blue Airlines Pty Ltd v Commissioner of Taxation [2010] FCAFC 137.
The ruling has simplified (and broadened) the definition of what constitutes a commercial parking station for the purpose of assessing and calculating FBT liability for car parking.
Practically, car parking stations at shopping centres, hospitals, hotels and the like that were previously not considered commercial for the threshold and valuation tests, are now considered to be commercial car parking stations.
If you are unsure of your car parking FBT obligations, we suggest that you consider further sooner rather than later – the new rules commenced back on 1 April 2022 and will need to be considered in your 2023 FBT Return.
Whilst the definition of what is a commercial parking station is now easier to understand, it will create more headaches for employers. Let us be the panadol to your car parking headache and request a no obligation fee quote to do the heavy lifting for you: https://form.jotform.co/80218922354859
I was recently asked – What are some practical tips on how to get my clients to take the need to register for FBT seriously?
My suggestions regarding the implications of not being registered and reasons for being registered:
If your not registered for FBT then you won’t be thinking about FBT – ie there is no annual obligation. By registering for FBT, you need to be thinking about FBT at least once a year (hopefully more frequently)
ATO are actively FBT auditing Small Businesses
The ATO have identified a $1 billion FBT gap and attribute this loss of revenue to small business
The ATO are extracting vehicle registration in each State and Territory and checking against FBT registration – this is real low hanging fruit
If an employer is not registered for FBT, then the ATO has unlimited powers to audit past years – we are seeing some audits going back up to 12 years and in one current FBT audit 16 years
If registered for FBT, the ATO will generally only look back at 2-3 years and be more accepting of genuine mistakes
In addition to FBT liabilities, the ATO will charge penalties (up to 200%), accrued interest and failure to lodge penalties
The ATO will expect any past Reportable Fringe Benefit obligations to be complied with in relation to current and former employees – this can get messy very quickly. Employees (and former employees) will expect the employer to foot the bill of any personal income tax return amendments, and request other compensation
From the FBT audits we have been involved with, the ATO are also raising concerns with Income Tax deductibility and entitlement to claim GST credits
There are 13 defined fringe benefit categories – FBT is not just about Motor Vehicles and Entertainment
The grossed up value of Fringe Benefits must be included in the calculation of Taxable Wages for Payroll Tax liability calculation and calculating Workcover premiums
The ATO are actively encouraging Tax Agents to ensure they have a “FBT Service Line” offering and that Tax Agents are engaging with their clients on FBT
Reputational Risk and Business Disturbance, High Stress Levels
There has never been a better time to engage with your clients (and new clients) in relation to FBT. The ATO want Tax Practitioners to engage with their clients on FBT.
Some startling facts that highlight the risk for Small Business Employers – and the opportunity for Tax Practitioners:
There are 900,000 active employers in Australia – 80% have tax practitioners, 12% (108,000) are registered for FBT, 50% (54,000) are small business
180,000 active employers are not supported by a tax practitioner
792,000 active employers are not FBT registered – most, if not all, are small business – failure to register means there is no ATO FBT audit time limit
The facts don’t lie. The ATO want to remove the registration / compliance blockers that exist for Small Business Employers and their Tax Practitioners.
When an Employer owns or leases, even a small number of motor vehicles (and has not considered FBT previously), the FBT liability exposure can quickly run in to tens of thousands dollars or even hundreds of thousands dollars over multiple FBT years – plus penalties, interest and FTL. We are seeing ATO FBT Auditors requiring FBT Returns to be lodged going back 3 to 4 years.
Removal and relocation expenses are those costs you incur to transfer or relocate for a work purpose. You can’t claim a deduction for removal or relocation costs. Even if relocating is a condition of your employment when you take up:
a transfer in an existing employment
new employment with a different employer.
Removal and relocation expenses never have a sufficient connection to earning your employment income or income producing activities. You incur these expenses to start earning employment income so they are private or domestic expenses.
However, Salary Packaging is a mechanism whereby you (the employee / individual) can claim a deduction for relocation expenses.
The distinction between entertainment and sustenance, and application of exemptions such as the minor benefit exemption are the most common issues encountered with respect to entertainment
Many employers are uncertain as to what is considered to be infrequent and irregular, and what is a reasonable total value of associated benefits, incurring high cost of compliance
The ATO acknowledge the above concerns and recognise there are challenges
These are key areas in FBT Compliance and will be discussed in our 2023 FBT Workshops: https://fbtsolutions.com.au/fbt-return-preparation-full-day-workshops/
To help you get ready for FBT 2023 we are running 8 full day Face to Face FBT Workshops and 2 full day Online Workshops across the country in February and March 2023. Here is the full list of locations and dates:
ONLINE: Tuesday 21 February 2023
Sydney: Wednesday 1 March 2023, Hilton Hotel – 488 George Street
Parramatta: Friday 3 March 2023, Novotel – 350 Church Street
Canberra: Thursday 9 March 2023, Novotel – 65 Northbourne Ave
Brisbane: Tuesday 14 March 2023, Hilton Hotel – 190 Elizabeth Street
Melbourne: Thursday 16 March 2023 Marriott Hotel – Corner Exhibition &, Lonsdale Streets
Perth: Tuesday 21 March 2023, Parmelia Hilton Hotel – 14 Mill Street
Adelaide: Thursday 23 March 2023, Hilton Hotel – 233 Victoria Square
Sydney: Tuesday 28 March 2023, Hilton Hotel – 488 George Street
ONLINE: Thursday 30 March 2023
