2018 FBT return Presented by Phil Turnour , FBT Risk & Intell, - - PowerPoint PPT Presentation

FBT lodgment: help with your 2018 FBT return

Presented by Phil Turnour, FBT Risk & Intell, Australian Taxation Office / 22 March 2018

Overview

• 1. FBT basics, rates and thresholds
• 2. In detail: how to lodge and pay
• 3. Tips and traps
• 4. What’s new with FBT…

Quick Code

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Google search

QC 44834 UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

FBT basics, rates and thresholds

What is FBT?

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiunnecjbg

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This video provides a quick introduction to FBT

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

First Question

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Who is liable to pay FBT?

• 1. Employers, or
• 2. Employees

2018 FBT Year

• The 2018 FBT year runs from 1 April 2017 to 31 March 2018.
• FBT may apply when an employer provides a non cash benefit to any employee/s.
• There are a number of rates and thresholds that are relevant for FBT purposes.
• The FBT rate for the 2018 FBT year is 47%.
• When working out your FBT liability you must gross-up the taxable value of benefits you

provide to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to purchase the benefits after paying tax.

• a. Type 1 gross-up rate for GST-creditable benefits is 2.0802.
• b. Type 2 gross-up rate for benefits without entitlement to a GST credit is 1.8868. This

gross-up date is always used for reporting on employee’s payment summaries.

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return 7

Basic concepts

FBT rates QC 18846

2018 FBT Year

Step Description 1 Work out the taxable value of each fringe benefit you provide to each employee (different rules apply based on type of benefit). 2 Work out the total taxable value of all the fringe benefits you provide for which you can claim a GST credit. 3 Work out the grossed-up taxable value of these benefits by multiplying amount from step 2 by the type 1 gross up rate. 4 Work out the total taxable value of all those benefits for which you can't claim a GST credit (e.g. GST-free or input taxed). 5 Work out the grossed-up taxable value of these benefits by multiplying amount from step 4 by the type 2 gross up rate. 6 Total fringe benefits taxable amount = step 3 plus step 5 amounts 7 FBT liability = total fringe benefits taxable amount (from step 6) x FBT rate (47% for 2018 FBT year) 8

How to determine your FBT liability

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return How to calculate QC 43873

FBT Rates and thresholds

2017 2018 (current) FBT rate 49% 47% Type 1 gross-up rate 2.1463 2.0802 Type 2 gross-up rate 1.9608 1.8868 Payment Summary Reporting Threshold (grossed up value) $3,921 $3,773 FBT Exemption Capping Threshold (for PBIs and HPCs) $31,177* $30,000* FBT Exemption Capping Threshold (for public and non-profit hospitals and public ambulance services) $17,667* $17,000* FBT Rebate Capping Threshold $31,177* $30,000* FBT Rebate Rate 49% 47%

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2018 FBT Year

*salary packaged meal entertainment and entertainment facility leasing expense benefits capped at $5,000.

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return FBT rates QC 18846

FBT Rates and thresholds

• Statutory benchmark interest rate 5.25%
• Car parking threshold $8.66
• Private use of motor vehicles other than cars
• Engine capacity up to 2,500 cc - 53 cents per km
• Engine capacity over 2,500 cc - 63 cents per km
• Motorcycles - 16 cents per km
• Indexation rates for non-remote area housing benefits - TD 2017/6
• Reasonable food and drink expenses - TD 2017/5
• Record keeping exemption threshold - $8,393
• For more information visit our Fringe benefits tax – rates and thresholds (QC 18846).

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2018 FBT Year

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return FBT rates QC 18846

In detail: how to lodge and pay

Key Dates

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2018 FBT Year

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

Date Description 21 May 2018 Final date for appointing a tax agent for FBT role. Lodge and pay FBT return for self preparers. Final date for states and territories that want to nominate an eligible state or territory body as an employer, or vary, or revoke a previous nomination. 28 May 2018 Payment due if under the lodgement program. 25 June 2018 Lodge FBT return for tax agent.

Lodgement and payment QC 43875 & QC 34594

When to lodge and pay

• Employers should register for FBT once they have determined they are providing fringe

benefits and have to pay FBT. Registrations options are (QC 27382):

• nline at https://register.business.gov.au/; or
• call 13 28 66, select option 3 and then option 3 again; or
• through a registered tax agent; or
• by lodging your annual FBT return;
• lodge an Application to register for fringe benefits tax using Business or Tax Agent

Portals or by fax or mail.

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Register for FBT

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return QC 27382

When to lodge and pay

• Cancelling registration when no further FBT liability for future years:

a) Lodge the annual FBT return (QC 43880) or Fringe benefits tax - notice of non-lodgment (QC 16542) and you advise you do not expect to lodge FBT returns for future years; or b) Call 13 28 66, select option 3 and then option 3 again; or c) Using the Business or Tax Agent Portals by selecting FBT subject ‘Cancel FBT’.

• You don’t need to lodge an FBT return if you are registered for FBT and your fringe benefits

taxable amount during the FBT year is nil and you did not pay FBT instalments. Instead, lodge a Fringe Benefits Tax – notice of non-lodgment.

• Registered tax agents can use the FBT non-lodgment advice (registered agents) form and

lodge using the portal.

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What to do if your FBT liability is NIL

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

How to lodge and payment options

• You can lodge online with Standard Business Reporting (SBR)-enabled software.
• You can lodge a paper return – returns can be downloaded from ato.gov.au (in the forms and

instructions section – QC 54571 and 54573).

• We offer a range of payment options both in Australia and overseas:
• BPay
• direct credit
• direct debit
• others on website, refer to How to pay (QC 50295 & 50296).

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More information available

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return www.ato.gov.au/FBT2018

Second question

1) Online with Standard Business Reporting 2) Paper 3) Uploading paper form via the portal 4) Tax Agent

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How are you intending to lodge your 2018 FBT return?

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

Tips & Traps

Things to know

• Understand when you are providing fringe benefits, look at the list of possible fringe benefits here:

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Types of fringe benefits

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

♦ Car ♦ Loans ♦ Debt waivers ♦ Expense payment ♦ Housing ♦ Board ♦ Property ♦ Living away from home allowances ♦ Residual ♦ Car parking ♦ Meal entertainment ♦ Income tax exempt body entertainment

• Each category has specific valuation rules.
• Have policies, procedures and systems in place to record the provision of benefits.
• Make sure you’ve received any employee declarations before lodgment. (QC 17516)
• Declarations can be electronic. See sub-chapter 4.9 of FBT: A Guide For Employers.
• Be aware of the record keeping requirements.

Types of fringe benefits QC 43852

Things to know

• Ensure you satisfy all conditions before claiming an exemption or reduction
• Understand the interaction of FBT, GST and income tax (employee contributions are

assessable income and GST inclusive).

• If you don’t need to lodge an FBT return and you are registered for FBT, complete a Fringe

benefits tax - notice of non-lodgment (QC 16542).

• Self preparers who need additional time to lodge or pay should contact us before the due

date: – Using the Business Portal select “Additional time to lodge-deferral request” from the new message options and “Payment arrangement request” – Call 13 28 66, then select option 3 and then option 3 again for lodgment deferrals – Call 13 11 42, for payment arrangements. FBT instalment payers should lodge all quarterly activity statements prior to lodging an FBT return

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Some tips…

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return Read the instructions QC 54573

What attracts our attention

• 1. Motor vehicles, when the car is provided to the employee and is used or available for private travel of the employee. We

also look at whether the exemption for minor, infrequent and irregular use of exempt motor vehicles (utes, vans, dual-cabs etc) is correctly applied. We have issued PCG 2017/D14 to provide practical guidance on this issue.

• 2. Employee contributions being subject to income tax and GST. We data match income tax returns and FBT returns to

ensure that the FBT liability is correctly reduced by amounts included in the assessable income of the taxpayer.

• 3. Ensure that only eligible rebatable entities receive the FBT rebate.
• 4. Correct application of the living-away-from-home allowance to ensure that deductions are only claimed for eligible

employees and all the other requirements are complied with (declarations, substantiation of expenses etc.).

• 5. We monitor those employers that provide fringe benefits to their employees, and fail to lodge an FBT return.
• 6. We look at the validity of the car parking valuation provided in relation to car parking fringe benefits.

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And will be subject to further scrutiny

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return QC 44834

What’s new with FBT…

FBT Law Updates

• 1. Reportable fringe benefits update
• 2. Small business entity FBT concession
• 3. Worker entitlement contributions
• 4. Change to the FBT rate

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Overview

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return QC 54573

• 1. Reportable fringe benefit changes
• Affects all employers and their employees unless the employer is FBT-exempt (under s 57A of FBT Act),.
• RFB amounts will no-longer be de-grossed when calculating Adjusted Taxable Income for various Family Tax Benefits,

Social Security and tax offset entitlements, as well as HECS and Medicare Levy Surcharge obligations.

• Employers need to identify on their employees’ payment summaries whether they are exempt or non-exempt (QC 21978).
• The change does not affect employees of FBT-exempt employers (see next slide).
• When reporting through Single Touch Payroll, complete either the RFB amount label for exempt employers or the label for

non-exempt employers.

• Relevant to RFBs provided

– from 1 January 2017 for Family Tax obligations; and – from 1 July 2017 for tax programmes.

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A reminder for non-exempt employers

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return QC 48707 & QC 16122

• 1. Reportable fringe benefit changes

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Non-exempt employers

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return Answer NO if you are none of the above Answer YES if you are public benevolent institution, health promotion charity, certain hospitals and public ambulance service (s 57A FBT Act) Failing to complete this label correctly will cause employees to have an incorrect calculation of their adjusted taxable income

Third Question

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Are you or the organization you work for an exempt employer under s 57A (public benevolent institutions, health promotions charities, certain hospitals and public ambulance services)? 1) Yes – public benevolent institution 2) Yes – health promotion charity 3) Yes – other or not sure of status 4) No

• 2. Small business entity FBT concessions
• Small business threshold was increased from 1 July 2016 (QC 50252). What does this mean for FBT purposes?
• From 2018 FBT year, the small business annual aggregated turnover threshold has been increased from $2m to $10m.
• Small business entities with an aggregated turnover of less than $10 million are able to access:

– the small business car parking exemption (QC 43890) : this is not available for parking provided in a commercial car park

• r if the taxpayer is a government body, a listed public company, or a subsidiary of a listed public company.

– FBT work-related devices exemption (QC 16948): small businesses can provide their employees with multiple work- related portable electronic devices that have substantially identical functions in the same FBT year, provided that the devices are primarily used for work.

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New threshold of $10 million

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

• 3. FBT exemption for certain worker entitlement

contributions (not enacted)

• Changes to the FBT exemption for certain worker entitlement contributions are included in the Fair

Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 currently before the Senate.

• Once enacted, the exemption will only be available to an employer where the contribution is made

to a fund either: – Registered under the Fair Work (Registered Organisations) Act 2009 – Established under a Commonwealth, state or territory law for the purposes of ensuring that long service leave is paid.

• Other existing conditions for the exemption are unchanged.
• Funds that are currently endorsed, or seeking endorsement as a worker entitlement fund (WEF)

for FBT purposes will be required to register under the Fair Work (Registered Organisations) Act 2009.

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• 4. Change to FBT rate (not enacted)
• On 9 May 2017 the Government announced that from 1 July

2019, the Medicare levy will increase from 2% to 2.5% to ensure that the National Disability Insurance Scheme is fully funded.

• The FBT rate for the 2019-20 and later FBT years would be

increased 47.5%.

• Draft bills introduced in Parliament in August 2017, passed

unchanged by the House of Representatives and have been introduced to the Senate.

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Increase in the Medicare levy - National Disability Insurance Scheme

Reminder! The FBT rate for the 2018 FBT year is 47%, reduced by 2% from 2017 FBT due to the removal of the temporary budget repair levy. UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

ATO Guidance

• 1. TR 2017/D6: Income tax and fringe benefits tax: when are deductions allowed for

employees’ travel expenses?

• 2. PCG 2017/D14 Exempt car and residual benefits: compliance approach to

determining private use of vehicles

• 3. Rewrite of TR 96/26 Car parking fringe benefits
• 4. Consultation on the definition of taxi

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Overview

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

• 1. Draft TR on travel expenses
• The TR provides new guidance on when the payment of travel

expenses are travel allowances or a LAFHA.

• This TR replaces MT 2030 (withdrawn) and reflects guidance from the

John Holland case.

• Key elements of the draft TR:

– Modern day examples; – Removal of 21 day rule.

• The consultation process was completed last year, and the ATO is now

considering the various submissions.

• More information on ATO advice and guidance section of ato.gov.au.

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TR 2017/D6: Income tax and fringe benefits tax: when are deductions allowed for employees’ travel expenses?

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

• 2. Draft PCG on private use of motor vehicles
• The draft PCG 2017/D14 deals with the private use of exempt vehicles. Generally, private

employee use of an exempt vehicle that is not minor, infrequent and irregular is subject to FBT.

• The PCG applies to vehicles subject to certain conditions e.g. the vehicle must not be provided

under a salary sacrifice arrangement.

• An employee will be taken to be complying with the minor private use provisions if the employee

uses the vehicle to travel: – Only between home and work with no diversion greater than 2 km; – No more 750 km of fully private journeys; – No single return journey for a wholly private purpose exceeds 200 km.

• Consultation closed on 9 February. The ATO is reviewing submissions. We received media
• attention. The PCG does not change the current law, but provides clear guidelines to those that are

willing to comply and needed clarity on what was allowed under this concession.

• More information on ATO advice and guidance section of ato.gov.au.

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Practical Compliance Guide (PCG) 2017/D14 Exempt car and residual benefits: compliance approach to determining private use of vehicles

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return PCGs are not our view of the law. Instead, they provide guidance about how we will apply compliance resources

• 3. Rewrite of Taxation Ruling TR 96/26
• We are rewriting TR 96/26:

– To reflect decisions in Qantas and Virgin cases. – To provide more clarity given the large variety of car parking alternatives that can be considered “commercial parking station”. – Feedback was received from stakeholder consultation last year.

• More information on ATO advice and guidance section of ato.gov.au.

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Car parking fringe benefits

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

• 4. Definition of taxi
• Consultation on the definition of taxi

– Following the Federal Court decision in Uber, we’re reviewing the definition of taxi in the FBT regime to determine whether it includes ride-sourcing vehicles and other vehicles for hire. – We are considering comments and issues raised during the consultation.

• More information on ATO advice and guidance section
• f ato.gov.au.

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Consultation on the definition of taxi

UNCLASSIFIED – FBT lodgment: help with your 2018 FBT return

Thank you for your participation!

ato.gov.au/FBT