When it comes to Fringe Benefit Tax (FBT), not a lot has changed in recent years. However, from 1 April 2021, a few additional concessions and exemptions have been afforded to taxpayers.
Small business car parking exemption – extended to more employers
Currently, certain businesses with a turnover of less than $10 million can provide car parking benefits to staff without incurring an FBT liability. From 1 April 2021, businesses with an aggregated turnover of less than $50 million will have access to the same FBT exemption, provided certain requirements are met.
Broadly, in order the access the exemption, the car parking must not be provided in a commercial car park, and the employer must not be one of the following:
- a government body
- a listed public company
- a subsidiary of a listed public company
There are a couple of opportunities with this including, but not limited to:
- If there is a commercial car park within 1km of the premises, your business may now be able to provide employees with car parking benefits without incurring an FBT liability provided your aggregated turnover is <$50 million and you satisfy the requirements above; or
- Alternatively, if the employer does not want to be 'out of pocket' for the cost of car parking, employees can salary sacrifice their car parking expenses and package a pre-tax deduction for these costs. Assuming the car parking benefits meet the exemption requirements listed above, the employer would not be required to pay FBT on these amounts.
FBT exemption for retraining
Currently, training is not subject to FBT provided there is sufficient connection between the training and the employee’s current employment, and that the expenses would be otherwise deductible to the employee.
In the lead up to 2020-21 Federal Budget, the Government announced an FBT exemption for employer provided retraining and reskilling for employees who are redeployed to a different role in the business. No draft legislation has been released as yet but the exemption is meant apply from the date of announcement (i.e. 2 October 2020).
However, for some perspective on how this exemption is meant to work, the announcement contained the following example:
“… a business that retrains their sales assistant in web design to redeploy them to an online marketing role in the business can get hit with FBT. By removing FBT, employers will be encouraged to help workers transition to new employment opportunities within or outside their business.”
Without the FBT exemption the business would have had to pay FBT on the costs above, as the sale assistant would not have been able to claim a deduction for the web design expenses, as it is not connected with their current role as a sales assistant (i.e. the otherwise deductible rule would not apply).
FBT – record keeping
From 1 April 2021, the record keeping requirements for certain businesses will be reduced. In the Federal Budget, the Government announced that employers will be allowed to use existing corporate records, rather than prescribed records, to comply with their fringe benefits tax obligations. No further information has been released since the Federal Budget, but we expect further detail to be released in coming months.
Records relating to odometer readings, car declarations and those kept by non-corporate entities should continue to be maintained.
Contact your local Moore Australia advisor today if you would like to discuss any of the above in greater detail.