This article outlines some of the major benefits and key developments over the last year concerning COVID-19 and Fringe Benefits Tax (FBT).
For the lodgement of your businesses FBT returns please note the following important dates:
- Employers providing motor vehicle benefits need to take the odometer reading on the 31st March 2021.
- If the FBT return is lodged electronically and registered with a tax agent, the due date is 25 June 2021, but the due date for payment is 28 May 2021.
- If you lodge by paper, the FBT return due date is 21 May 2021 and the FBT payment is due on this date.
FBT Issues due to COVID-19
- Working from home
You may have provided employees with items to allow them to work from home (or from another location) due to COVID-19. Some items will usually be exempt from FBT if they are primarily used by your employees for work including:
- portable printers
- other electronic devices.
If any significant private benefits are provided, they may have an FBT impact and details of should be forwarded to DFK BKM for consideration in your annual FBT return. The minor benefits exemption may apply for minor, infrequent and irregular benefits under $300.
- Motor Vehicle benefits
Where a car isn’t being driven at all, or is only being driven for maintenance purposes, the ATO accepst that you aren’t holding the car for the purposes of providing fringe benefits.
Where a car has not been driven at all during the covid-19 lockdown and it has been garaged at home, or has only been driven briefly for the purpose of maintaining the car, the ATO will accept that you don’t hold the car for the purpose of providing fringe benefits to your employee.
In these situations, provided you elect to use the operating cost method, there will be a nil taxable value for the car and no FBT liability.
- Car Parking
Closure of work car park –
If, on a particular day, your office is closed due to COVID-19 and therefore the work car park is also closed, you will not have provided a car parking benefit as there will be no car space available for use by your employee for more than four hours between 7.00am and 7.00pm on that day.
The time during which the work car park is closed will not form part of the availability periods used to calculate the taxable value of a car space under the statutory method.
Closure of nearby commercial parking stations –
If all of the commercial parking stations within a 1km radius of your business premises are closed on a particular day due to COVID-19, there will be no car parking benefits provided.
- 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.
- Cancelled events
You will not have to pay FBT if you are required to pay non-refundable costs for cancelled events your employees were due to attend. This is because the arrangement was between you and the event organisers, not your employees, and you have not provided any fringe benefits to your employees as they did not get to attend the event.
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. This would be an expense payment fringe benefit – unless the otherwise deductible rule applies.
Major Benefits to consideration in determining your FBT obligations for 2020/21
- 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 and meeting the “not designed for the principal purpose of carrying passengers test”.
- Meal entertainment
Determining what is (and what is not) entertainment (particularly in relation to food and drink) is the first and most crucial step employers must complete with respect to such expenditure. This is because the FBT, income tax and GST implications of incurring ‘entertainment’ expenditure are often different to the implications that arise in relation to ‘non-entertainment’ expenditure.
- 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.