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COVID-19 and Fringe Benefits Tax

COVID-19 and Fringe Benefits Tax

Kerry Bebendorf

Due to COVID-19, businesses may be providing employees with benefits they wouldn’t usually provide. If you provide benefits to your employees in addition to salary and wages, fringe benefits tax (FBT) may apply.  However, exemptions and concessions are available to help reduce or eliminate the amount of FBT you pay.

Salary Packaging – Not-for-Profits
If you provide salary-packaged meal entertainment to your employees under the exempt or rebatable cap during COVID-19, the ATO will not scrutinise expenditure under these arrangements for the:
  • FBT year ending 31 March 2021 – where meals are provided by a supplier that was authorised as a meal entertainment provider as at 1 March 2020
  • FBT year ended 31 March 2020 – when restaurants and public venues were closed.
Garaging of work vehicles
If you have been garaging work cars at your employees' homes due to COVID-19, you may not have an FBT liability depending on:
  • the type of vehicle
  • how often the car is driven, and
  • the calculation method you use to report for car benefits.
Effect on vehicle logbooks
Your employees may have changed the amount of work-related driving they are doing due to the effects of COVID-19.

If you use the operating cost method to calculate fringe benefits, you can still rely on existing logbooks to make a reasonable estimate of the business kilometres travelled. Alternatively, you can ask your employees prepare a new logbook that's representative of business use of vehicles throughout the year.

Provision of accommodation, food and transport 
If you have provided emergency accommodation, food, transport or other assistance to an employee, you will not have to pay FBT if:
  • the benefit is emergency assistance to provide immediate relief, and
  • the employee is, or is at risk of being, adversely affected by COVID-19.
The FBT emergency assistance exemption applies in relation to COVID-19 if you provide emergency accommodation, food, transport or other assistance to an affected employee. For example:
  • expenses incurred to relocate an employee, including cost of flights to return to Australia
  • expenses incurred for food and temporary accommodation if an employee cannot travel due to restrictions (domestic, interstate or intrastate)
  • benefits provided to assist an employee to self-isolate or quarantine
  • paying for employees’ transport expenses including car hire and transport to temporary accommodation.
Fly-in-fly-out workers
Benefits considered emergency assistance will not incur FBT. This includes providing temporary accommodation and meals to fly-in fly-out (or drive-in drive-out) employees who are unable to return home due to COVID-19 domestic and international travel restrictions.

Emergency health care
If you provide emergency health care to an employee affected by COVID-19, there is a limited exemption from FBT on the health care provided
  • by an employee of yours (or an employee of a related company)
  • on your premises (or premises of the related company)
  • at or adjacent to an employee's worksite.
If you pay for your employee's ongoing medical or hospital expenses, FBT applies.  However, if you pay to transport your employee from the workplace to seek medical help, the cost is exempt from FBT.

Flu vaccinations for employees
Providing flu vaccinations to employees is generally exempt from FBT because it is work-related preventative health care. You will not have to pay FBT for providing your employees with a voucher or reimbursement for getting the flu vaccine from a GP or chemist, but this must be made available to all employees to be exempt.

COVID-19 testing
You will not have to pay FBT for providing COVID-19 testing to employees if both of the following apply:
  • testing is carried out by a legally qualified medical practitioner or nurse, and
  • testing is available to all employees.
If only some of your employees get COVID-19 tests, the tests are still exempt as long as they are offered to all employees.

Cancellation of Events
If you are required to pay non-refundable costs for cancelled events your employees were due to attend, you will not be liable for FBT. As the booking was not an arrangement between you and your employees, and your employees did not attend an event, you have not provided any fringe benefits to your employees. 

However, you may have to pay FBT if your employees were required to pay for their attendance at the cancelled event and you reimbursed them. 

If you would like to discuss any of these issues in further detail, contact your Moore Australia advisor.