2017 Fringe Benefits Tax & Salary Packaging Seminar

Transcription

1 2017 Fringe Benefits Tax & Salary Packaging Seminar The guidance and strategies needed to navigate through FBT in 2017 & beyond Elizabeth Lucas Partner - Remuneration Taxes Grant Thornton Australia George Sinanis Supervisor Tax Grant Thornton Australia

2 Agenda Key updates for 2017 Identifying non-obvious fringe benefits Minimising the FBT cost Compliance tips Salary packaging ATO focus areas ATO consultations

3 Key updates for 2017 FBT rate change from 1 April 2017 NB. FBT rebate rate now aligned to FBT rate FBT Year 2016/17 From 1 April 2017 FBT rate and FBT rebate rate 49% 47% Type 1 gross up rate Type 2 gross up rate FBT exemption/rebate cap (grossed up) hospitals, etc. $17,667 $17,000 Above cap for Type 2 benefits not grossed-up $9,010 $9,010 FBT exemption/rebate cap (grossed up) other entities $31,177 $30,000 Above cap for Type 2 benefits not grossed-up $15,900 $15,900

4 Key updates for 2017 continued Salary packaged bus travel Class rulings re mechanisms to salary package bus travel between home and work FBT exempt Car cents/km - rate of 66 cents/km (up to 5,000 business kms) Includes electric/hybrid cars Applicable when applying otherwise deductible rule to car expenses Single Touch Payroll Reporting Available from 1 July 2017 Where >20 employees, can use to submit reportable fringe benefits amounts

5 Key updates for 2017 continued Safe harbour - PCG 2016/10 Simplified log book method Fleet of 20 or more cars and at least 75% with valid logbook can apply average business use % across the fleet Applicable to 'work horse' fleets, not executive vehicles If applied, applies to whole 'work horse' fleet Reportable fringe benefits amounts for means tested government assistance/levies grossed up value applied, except for certain NFPs

6 Identifying non-obvious fringe benefits Are cars taken home by employees for security or other reasons but only used for business travel otherwise? Do your employees share cars that are therefore not reportable? Was car parking provided within 1km of a commercial parking station charging more than $8.48 for all day parking? Was entertainment provided by way of food, drink or recreation to employees?

7 Identifying non-obvious fringe benefits continued Have you provided employees with goods/services at a discounted price? Have you provided employees with access to discounts from third parties? Do you have any incentive/reward programs formal or informal? Do you have a bring-your-own-device program?

8 Minimising the FBT cost 1 Is there more information we can obtain to reduce the taxable value, e.g. re usage or purpose of benefit? 2 Are there any concessions/exemptions available? 3 Can we obtain invoices/records/declarations/logbooks from the employee to reduce the taxable value? 4 Did the employee contribute from after-tax salary to the benefit? 5 What processes/procedures/restructuring can we implement to reduce costs going forward? E.g. provide cash instead of benefits, reduce provision of benefits, ensure documentation obtained on a timely basis, etc.

9 Minimising the FBT cost continued Cars & other vehicles Maintain log books (12 week record lasts for 5 years) and ensure employees clear on what is / isn't a business trip Record days not available for private use Capture non-reimbursed car expenses paid by employee (& associate) as recipient contributions (ie fuel expenditure) Introduce additional contributions towards private use For fleets of 100 or more cars, see GT re additional savings Exempt vehicles ensure policy only permits employee to drive vehicle and minimal/insignificant private use

10 Minimising the FBT cost continued Remote area benefits Many concessions available related to employee housing where employee permanently works and lives in remote area Utilise to save costs for employer, or pass on savings to employees through salary packaging, or both Basic categories: Housing owned/rented by employer exempt Housing rented by employee reimburse up to 50% exempt Other costs, e.g. mortgage interest, capital purchase cost 50% of what reimbursed subject to FBT

11 Compliance Tips Entertainment 50/50 valuation easy, detailed records not required, but may be expensive Process to assess entertainment: Exclude sustenance Assess "actual" method exclude events on business premises, exclude minor benefits (less than $300 incl GST & irregular & infrequent but not applicable for NFPs) Assess "50/50" or "Actual" method GST and income tax follow FBT treatment BAS adjustment if necessary

12 Compliance Tips continued Travel-related No private use declaration can replace travel diary Consider whether permanent move, living away from home or business travel - draft ruling coming to assist with this Maximise use of concessions: Permanent relocations relocation costs, temporary accommodation, incidental costs on sale and purchase of homes (incl stamp duty on new home) LAFH relocation costs, 12 months of accommodation and food Business travel allowance or actual costs for travel, accommodation, meals, incidentals

13 Compliance Tips continued Long service awards Maximum exemption calculated with reference to time of most recent award i.e. $100 per year since then Overseas employees Outbound - consider connection of employer to Australia benefits may be assessable to employees instead Inbound consider structure and composition of package e.g. allowances vs reimbursements, FBT interaction with tax equalisation arrangements, etc.

14 Compliance Tips continued Payroll tax and workers compensation insurance FBT flow on effect Split benefits per State/Territory based on actual provision of benefits or based on wages FBT amendments affect payroll tax and workers compensation Data matching is occurring between FBT returns and annual payroll reconciliations Payroll tax audits often followed by ATO employer obligation audit

15 Compliance Tips continued Other common issues Salary packaging provider reports should be reviewed for accuracy sense check Gifts to employees on termination (e.g. car) = ETP not FBT Non-cash benefits provided to contractors - consider who is really an employee (also PAYG, superannuation, etc. implications) Benefits provided to directors, volunteers and honorariums

16 Salary Packaging Ensure adequate 'set up' documentation in place + and other ATO requirements satisfied (TR 2001/10) Clear employee guidelines/policies and good governance practices important

17 Salary Packaging What to include in the menu of packaged benefits where employer does not have tax concession Cars novated & associate leases Superannuation Airport lounge memberships LAFHA Relocation benefits (e.g. stamp duty on home) Remote area benefits Others for NFPs Can include expenses incurred in prior year

18 ATO focus areas Lapsed and late lodgers Car fringe benefits Re GSLL & Ors and FCT penalties for failing to lodge FBT returns omitted car fringe benefits Housing fringe benefits Incorrect claiming of FBT exemption or FBT rebate Correct calculation and reporting of LAFHA Benefits provided to directors of private companies Employee reward programs

19 ATO focus areas continued Noted by ATO as areas to watch: LAFHA beyond 12 months Benefits to overseas employees Car parking Loan/debt waiver re salary overpayments Entertainment and minor benefits Incorrect exemption of utes, etc.

20 ATO consultation projects Safe harbour working group Car log books released Minor use of exempt vehicles under development Minor entertainment benefits under development Business travel and living away from home draft ruling supposed to be coming Travel allowance rates for meals, accommodation, incidentals Car parking

21 Questions?

22 Disclaimer The information above is general in nature and is not intended to provide a detailed consideration of the tax issues involved or their application in different circumstances. Additional tax advice may be required. The material and opinions in the presentation should not be used or treated as professional advice.

23 Thank you for joining us Elizabeth Lucas Partner Remuneration Taxes T E elizabeth.lucas@au.gt.com George Sinanis Supervisor Tax T E george.sinanis@au.gt.com