Fringe Benefit Tax returns can be really challenging, especially with the extra complexity of COVD-19 this year! So we’ve put together some information and tips to help take the stress out of FBT. There are two big areas where FBT applies: cars and working from home.
Car Fringe Benefits
The ATO collects motor vehicle information from government agencies to determine whether businesses are meeting their FBT obligations, so it’s vital to know when a car fringe benefit arises.
When do car fringe benefits apply?
In general, a car fringe benefit arises where the following requirements have been satisfied:
(a) There is a car. The concept of a car refers to a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers.
(b) The car is held(a car is owned by the person, leased to the person or otherwise made available to the person)
(c) The car is either:
• applied to a private use by an employee or associate; or is
• deemed to be available for the private use of an employee or associate because the car is:
– garaged or kept at or near a place of residence of the employee or associate; or
– not on the employer’s business premises and the employee or associate has the use or custody and control of the car, or, is otherwise entitled to apply the car to private use.
Car fringe benefits and COVID-19
If a car fringe benefit does arise, the employer calculates the taxable value of the car fringe benefit under the statutory formula method or the operating cost method.
Depending on the State/Territory, an employee is likely to have had a car garaged at home due to the effects of the COVID-19 pandemic for only part of the FBT year. In this situation, if a car was not being driven or had only been driven for the purpose of maintaining the car, the ATO will accept that the car was not being held for providing a fringe benefit to the employee.
However, the COVID-19 concession for car fringe benefits only applies to employers valuing car fringe benefits under the operating cost method. Therefore, it is essential a valid logbook is maintained to avail this concession.
Car fringe benefits – avoid costly mistakes and get it right!
Car fringe benefits can be confusing under normal circumstances, and the impact of the COVID-19 pandemic on employee movements and working conditions has added another layer of complexity for those who need to lodge their returns this year.
Getting it wrong can be costly, so it’s important to get it right.
If you need to know more, check out the ATO’s factsheet COVID-19 and Car Fringe Benefits.
You can also review Chapter 7 of the ATO’s Fringe benefits tax - a guide for employers, which outlines rights and obligations relating to Car Fringe Benefits.
Working From Home Fringe Benefits
The shift to working from home was one of the major impacts of COVID-19 over the last financial year, and this has blurred the line when it comes to the calculation fringe benefits tax.
Here’s how FBT applies to office equipment and portable electric devices.
Office equipment and FBT
In most cases, an employer will not have an FBT liability where they provide an employee with the use of office equipment (eg desk, chair) to assist the employee with working from home for a period of time, and where the equipment will be returned to the employer.
However, this does not address items that qualify as portable electronic devices (e.g., laptop computers).
Portable electronic devices and FBT
Employers who provide employees with a portable electronic device (or the use of such a device) during the COVID-19 lockdown may be entitled to apply the FBT exemption contained under S.58X for eligible work-related items.
For these purposes, a portable electronic device includes:
• mobile phones;
• personal digital assistants;
• laptop computers; and
• portable printers (i.e., one that is capable of operating without an external power supply).
However, the item must be used primarily by the employee for work and cannot be a duplicate of something with substantially the same function, unless it is a replacement item.
Need more help calculating FBT?
We realise that COVID-19 has added an extra layer of complexity this year by adding some new taxable scenarios and removing others, so it pays to get professional advice leading into tax time. Please contact our team at Lead Advisory Group if you need specific advice about lodging your fringe benefits tax return.