CATEGORIES OF FRINGE BENEFITS

Transcription

1 Categories CATEGORIES OF FRIGE BEEFITS CATEGORY CALCULATIO OF TAXABLE VALUE REDUCED BY Cars 1. Statutory Formula 2. Operating Cost Loans Statutory Interest 2019: 5.20% o Interest charged (Employee contributions) o Remote area concessions Debt waiver Amount waived Employee contributions Expense payment Amount paid or reimbursed Housing 1. Overseas o Market value 2. Australian on-remote A. Hotels, Motels, Guest Houses Caravan Parks, Mobile Homes o Market Value o 75% of MV B. ormal Type Housing o Market Value; or o MV + CPI o $1,000 in-house concession o Remote area and other concessions o Remote area and other concessions Board Living Away From Home Allowance Meal Entertainment Tax Exempt Body Entertainment Car parking $2/meal per adult $1/meal per child Amount of allowance 1. Division 9A (50/50 Split) 2. Division 9A (12 week register) 3. Actual expenditure Amount of benefit provided 1. Commercial parking station method 2. Market value 3. Average cost o Exempt accommodation o Exempt food (as a form of agent acting on behalf of the principal) GE Seminars Australia

2 General Principles CATEGORY CALCULATIO OF TAXABLE VALUE REDUCED BY Property Residual 1. In-House Through Salary Packaging o AL amount 2. In-House ot Through Salary Packaging A. Manufactured/Processed (a) on-retail (Identical) o Lowest AL selling price (b) Retail (Identical) o 75% of lowest price to public (c) Other Goods (ot Identical) o 75% of market value B. Trading Stock o AL purchase price; or o AL MV (if goods lost value) C. Other Goods o 75% of MV 3. External (ot In-House) (a) Purchased at AL By Employer o Cost price (b) Provided by a Third Party, Paid for by Employer o Employer's expenditure amount 4. Airline Transport o 75% of stand-by value 1. In-House Through Salary Packaging o AL amount 2. In-House ot Through Salary Packaging A. Identical to Those Sold to Public o 75% of lowest price to public B. ot Identical to Those Sold to Public o 75% of market value 3. External (ot In-House) (a) Purchased at AL by employer/associate: o Cost price (b) Other Benefits o Reasonable AL amount 4. Airline Transport o 75% of stand-by value o $1,000 in-house concession o Remote area and other concessions (AL = arm's length MV = market value) o $1,000 in-house concession o Remote area and other concessions Seminars Australia GE 5

3 Third Parties and Arrangements FLOWCHART CASES 2 and 3 A benefit is provided by a third party to an employee (or associate) Was the benefit provided under an agreement between the third party and the employer*? YES A fringe benefit arises under paragraph 136(1)(e). The employer is liable for FBT. O Was the employer* involved in the provision of the benefit? O A fringe benefit does not arise. The employer is not liable for FBT. YES Did the employer* know that they were involved? YES A fringe benefit arises under 136(1)(ea). The employer is liable for FBT. O Should the employer* have known that they were involved? YES A fringe benefit arises under 136(1)(ea). The employer is liable for FBT. O A fringe benefit does not arise. The employer is not liable for FBT. * Reference to employer also includes an employer's associate GE Seminars Australia

4 Valuation of Benefits VALUATIO OF CAR BEEFITS Alternative Methods Statutory formula method (SFM) or the operating cost method (OCM) may be used for any or all of the cars held by the employer SFM automatically applies unless the employer elects to use the OCM: s10(1) Employer must elect to use the OCM and the election: o must be in writing and "lodged with the Commissioner" on or before lodgement of return: s10(4) Although in reality, the document is kept with the employer. o is not permanent it applies for the particular car only in relation to a year of tax Employer is free to switch between methods An election to use the OCM will be deemed not to have been made by the employer if the use of the OCM results in a higher taxable value than would have been the case under the SFM: s10(5) CAR Seminars Australia

5 Car Fringe Benefits Full ovation: IT 2509, TR 1999/15 May or may not sub-lease vehicle LEASIG COY Leases vehicle under finance lease EMPLOYEE Salary package EMPLOYER Provides vehicle The employer and employee and leasing coy enter into a full novation agreement which has the effect of transferring the rights and obligations of the lessee under a lease from the employee to the employer and the original agreements, being a finance lease, and/or a sublease, are rescinded. LEASIG COY EMPLOYER Provides vehicle Effectively employer now has lease EMPLOYEE Salary package Seminars Australia CAR 51

6 Entertainment Benefits If you want to apply Division 9A 50/50 split, use column 2 only If you want to apply Division 9A register method, use column 2 for register entries and then columns 4 or 6 to determine % that are fringe benefits If you are not applying Division 9A, (i.e. you are applying other Divisions) use columns 4 and 5 or 6 only TR 97/17 Column umber : Circumstances In Which Food and Drink Provided (ote 1) ME Y/ R Y/ Taxable Employer FBT Y/ Deduction Y/ (ote 2) Taxexempt Body FBT Y/ (a) Food and drink consumed on the employer s premises...(ote 3) (i)... by employees 1) at a social function Y Y 2) in an in-house dining facility not at a social function (ote 4) 3) in an in-house dining facility at a social function (ote 4) 4) morning & afternoon teas & light lunches (ote 5) Y/ Y Y Y Y (ii)... by associates 1) at a social function Y Y Y Y 2) in an in-house dining facility not at a social function (ote 4) 3) in an in-house dining facility at a social function (ote 4) 4) morning & afternoon teas & light lunches (ote 5) If Y If Y Y Y Y Y Y Y Y Y Y Y Y (iii)... by clients 1) at a social function Y 2) in an in-house dining facility not at a social function (ote 4) 3) in an in-house dining facility at a social function (ote 4) 4) morning & afternoon teas & light lunches (ote 5) if Y if (#) Y Y Y Seminars Australia ET 15

7 Exclusions & Exemptions Certain Business Items: s58x Exempt if provided as either a property, expense payment or residual benefit, and must be primarily for use in the employee's employment. Primarily for use in the employee's employment is determined at the time the benefit is provided, not retrospectively: ATO ID 2008/127. However, an employer must use a reasonable basis to determine whether an item is primarily for use in an employee s employment for example, the employee s job description, duty statement or employment contract: Tax Laws Amendment (Small Business Measures o. 3) Bill 2015 EM. (a) (b) (c) (d) (e) a portable electronic device; (e.g. mobile telephone, laptop, portable printer, PDA, GPS. Employee could be provided with one each of these items provided they do not have substantially identical functions: s58x(3). For mobiles phones, the exemption covers the phone, calls and rental: TLG Employee can no longer claim depreciation) an item of computer software; an item of protective clothing; a briefcase; a tool of trade. Exemption only applies to one item per employee per year (as an expense payment or property benefit) of substantially identical functions. However, if more than one item is provided in an FBT year, the exemption may still apply (s58x(4)): (a) if the later item is a replacement for the earlier item which was lost, destroyed or needed replacing because of developments in technology; or (b) from 1 April 2016, if the later item is a portable electronic device and the employer is a small business entity (turnover less than $2m). The later item need not be a replacement, and may have substantially identical functions to a device already provided to that employee in the same FBT year, and all of the devices will be exempt from FBT. EXM Seminars Australia

8 Index IDEX Airline Transport Fringe Benefits... MIS 25 Board Fringe Benefits HOS - overview... HOS 10 - taxable value... HOS 13 Car Fringe Benefits CAR - associate leases... CAR 48 - car expenses paid by employer vs employee... CAR 38 - commercial type vehicles... CAR 40 - definition of a car... CAR 5 - election to use operating cost method... CAR 6 - exempt benefits... CAR 40 - holding the car... CAR 3 - motor vehicle leasing arrangements... CAR 42 - novated leasing... CAR 51 - operating cost method... CAR 18 - business percentage (BP)... CAR 24 - business trips for log book purposes... CAR 29 - car expenses (C)... CAR 20 - deemed depreciation (C)... CAR 21 - imputed interest (C)... CAR 22 - leasing charges (C)... CAR 23 - log books... CAR 25 - odometer and other records... CAR 27 - recipient contributions (R)... CAR 35 - replacement cars... CAR 28 - travel to and from work... CAR 29 - otherwise available cars... CAR 54 - statutory formula method... CAR 7 - annualised kms... CAR 7 - actual or available for private use... CAR 12 - base value (A)... CAR 8 - cost price... CAR 9 - custody or control... CAR 13 - days of private use (C)... CAR 12 - employee contributions (recipients' payment) (E)... CAR 16 - fleet discounts... CAR 9 - four year rule... CAR 10 - garaging at place of residence... CAR 12 - statutory fraction (0.20)... CAR 7 - trade-ins... CAR 9 - taxable value... CAR 6 - unregistered cars... CAR 43 - which method?... CAR Seminars Australia ID 3