This following article outlines some of the key developments in Fringe Benefits for the 2022-2023 Fringe Benefits (FBT) year.
1. Working From Home
You may have provided employees with items to allow them to work from home (or from another location).
Some items will usually be exempt from FBT if they are primarily used by your employees for work. The items include:
- Portable printers
- Other electronic devices
- Computer software
- Tools of trade
This is a defined list and does not include a desktop computer.
The exemption is limited to just one of each of these items per year where it carries out a substantially identical function. If any significant private benefits are provided, they may have an FBT impact and details of should be forwarded to your accountant for consideration.
The “otherwise deductible” should also be considered. Under this rule the taxable value for certain benefits may be reduced by the amount that the employee would be entitled to claim as a deduction in their income tax return had they incurred the expense themselves.
The minor benefits exemption may apply for minor, infrequent and irregular benefits under $300, but these minor benefits do not provide a tax deduction or allow a claim on GST input credits.
2. Electric motor vehicles exemption
You do not pay FBT if you provide private use of an electric car that meets all the following conditions:
- The car is a zero or low emissions vehicle
- The first time the car is both held and used is on or after 1 July 2022
- The car is used by a current employee or their associates (such as family members)
- Luxury car tax (LCT) has never been payable on the importation or sale of the car.
Benefits provided under a salary packaging arrangement are included in the exemption. The following car expenses are exempt from FBT if they are provided for an eligible electric car:
- Repairs or maintenance
- Fuel (including electricity to charge and run electric cars).
3. Flu vaccinations for employees working from home
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 as long as it is available to all employees.
If only some of your employees choose to receive the flu vaccine, the voucher or reimbursement is still exempt from FBT as long as it is offered to all employees.
Other FBT obligations for 2022-2023
1. Motor vehicle benefits
As a result of the ATO’s continuing and elevated level of attention on car fringe benefits, cars often represent the biggest risk area for employers.
The provision of a workhorse vehicle to an employee can be exempt from FBT, but it is not an automatic exemption. Rather, it is an employer’s ability to claim an FBT exemption with respect to a workhorse vehicle ultimately depends on the extent of the employee’s private use of the vehicle
2. Retraining and reskilling benefits.
Employers who provide training or education to employees who are redundant, or soon to be made redundant, may be exempt from fringe benefit tax. Retraining and reskilling benefits are exempt from FBT where the:
- An employer provides a benefit in respect of training or education to a redundant, or soon to be redundant, employee
- An employer has complied with all obligations under the Fair Work Act 2009 that relate to the employee’s redundancy, and
- The education or training that is provided is
- not related to the employee’s current job role, and
- for the primary purpose of helping that employee gain new employment.
3. Benefits provided to employees by third parties.
It is increasingly common for employers to allow their employees (and/or their associates) to receive non-cash benefits from third parties (e.g., clients, suppliers and contractors). The types of benefits typically provided by a third party to an employer’s staff often involve entertainment based benefits (e.g., attendance at a corporate box, a meal or attendance at a third party’s Christmas or end-of-financial year party).
Unfortunately, many employers incorrectly believe that an FBT liability does not, and cannot, arise in these circumstances, presumably because the benefit is not provided by the employer. It is important to be aware however, that the FBT Act contains rules, referred to as the ‘arranger provisions’, that can apply to create an FBT liability for an employer in respect of a benefit provided to their employee (or associate), by a third party (referred to as a ‘third-party benefit’).
4. Car parking benefits
Employers providing car parking to employees may face an unexpected fringe benefits tax (FBT) liability this year, with a new taxation ruling around commercial car parks released.
Historically, the Australian Taxation Office (ATO) had accepted that a car park that had a free period, or low hourly rate but imposed a penalty rate for all-day parking, was not deemed a commercial car park. This generally applied to most shopping centre or hospital car parks.
However, following the Federal Court decisions in Commissioner of Taxation v Qantas Airways Ltd  FCAFC 168 and Virgin Blue Airlines Pty Ltd v Commissioner of Taxation  FCAFC 137, the ATO released Taxation Ruling TR 2021/2. The new ruling now defines shopping centre and hospital car parks as commercial car parks.
This change may affect those who have previously had access to the car parking exemption, where the car is not parked at a commercial parking station and the sum of the employer’s ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million.
5. Property benefits
Was any property provided (free or at a discount) in respect of an employee’s employment? Property includes all tangible and intangible property. Examples of property are goods, shares and real property. The ATO considers the provision of Bitcoin to be a property fringe benefit.
6. Residual fringe benefits
A residual fringe benefit may arise when you provide an employee with any benefit (including a right, privilege, service or facility) that doesn’t fall into one of the specific categories of fringe benefits.
Examples of residual fringe benefits:
- use of employer’s property, such as a video camera or television
- provision of a service, such as advice given by a solicitor
- private use of a motor vehicle that is not a ‘car’ for fringe benefits tax (FBT) purposes, such as a one-tonne utility.
7. Travel benefits
Fringe benefits tax (FBT) may apply if your business pays for or reimburses your employees for their travel expenses. Certain exemptions and concessions may apply to reduce your FBT liability. For example, your business may not have an FBT liability if it reimburses an employee for their travel expenses to attend a work conference, which the employee would have been able to claim as an income tax deduction if you hadn’t reimbursed them.
You will be liable for FBT if your employee extended their travel for private purposes and you reimburse the employee for these private costs. If your business provides benefits to your employees, you may need to obtain some records from the employee.
For further information you may wish to contact us or review TR 2021/4 “Income and FBT: tax treatment of employee expenses and allowances for accommodation, food and drink, travel and LAFH”