A fringe benefit tax (FBT) is paid by employers who provide certain benefits to their employees or their employees family or friends. Key examples of fringe benefits include; allowing an employee to use a car for work for private purpose unrelated to work, paying for an employee’s gym membership, providing entertainment by giving away free tickets to concerts. FBT applies even when the benefit is provided by a third party under an arrangement with the employer.
The following are not fringe benefits; shares purchased under approved employee share acquisition schemes, salary and wages, employer contributions to complying super funds and employment termination payments (including for example, the gift or sale at a discount of a company car to an employee on termination).
How Covid-19 Has Changed Fringe Benefit’s
Businesses might be able to provide their employees with benefits which they don’t usually offer as a result of covid-19. This includes employers paying for items that enable employees to work from home.
Fringe benefits tax may apply if you offer benefits in addition to salary and wages. However, exemptions and concessions are available, that can reduce (or eliminate) the amount of FBT you pay.
You may provide your employees with benefits you do not usually provide because of COVID-19. This includes paying for items that allow your employees to work from home.
Some items will usually be exempt from FBT if they are primarily used by your employees for work. The items include; laptops, portable printers and over electronic devices.
Also, the minor benefits exemption or the otherwise deductible rule may apply if you: allow your employee to use a monitor, keyboard or mouse they otherwise use in the workplace, or provide them with computer consumables or stationary or pay for their phone and internet access.
The minor benefits exemption may apply for infrequent, minor and irregular benefits under $300. The otherwise deductible rule allows you to reduce the taxable value of benefits by the amount that your employee can claim a once-only deduction.
Another common Fringe Benefit that has been impacted by covid-19 are the benefits associated with the car park that is provided for employees to park their car at work.
If, on any given day, your office is closed due to covid-19 this means that the work car park is also closed. As a result of this employees will not have provided a car parking benefit as there will be no car space available for use by your employee for more than four hours between 7.00am and 7.00pm on that day.
The time during which the work car park is closed will not form part of the availability periods used to calculate the taxable value of a car space under the statutory method.
Furthermore, if all of the commercial parking stations within a 1km radius of your businesses location are closed on a particular day due to covid-19 there will be no car parking benefits provided to employees.
According to guidelines release by the ATO, If, on 1 April 2020, the lowest fee charged by all of the commercial parking stations within a one-kilometre radius of your business premises for all-day parking was less than $9.15, you will not have provided a car parking benefit. For example, this may occur where all of the commercial parking stations have discounted their all-day parking rate due to COVID-19.
However, the reduced fee must not be significantly greater or less than the average of the lowest fee charged by a commercial parking station operator in the four weeks prior to 1 April 2020 or the four weeks after 1 April 2020. The reduced fee is ignored for the purpose of determining the lowest fee charged by a nearby commercial parking station if it does not meet this requirement.
You won’t provide a car fringe benefit where a car is not applied for your employee’s private use or taken to be available for your employee’s private use.
During a period of covid-19 restrictions, a car that has been provided to an employee will not taken to be available for your employee’s private use if all the following apply: the car is returned to your business premises, the employee has relinquished an entitlement to use your car for private purposes or the employee cannot gain access to the car.
Some factors that indicate a car is not taken to be available for your employee’s private use during these restrictions include where: the employers requests that the car be returned to the business’s premises, the employee does not have physical access to the car, if the employee has made a choice to surrender the car they cannot change that choice and obtain the ability to access the car, the car is returned to your business premises and you apply the car to a different purpose (although a separate car benefit may arise if you give the car to another employee who applies it for private use) or you consistently enforce a policy that your employee cannot gain access to the car.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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