FBT for NFPs. A practical guide for your FBT compliance

Transcription

1 FBT for NFPs A practical guide for your FBT compliance Presented by Phil Turnour, Risk & Intelligence Manager, Australian Taxation Office / 6 April 2017

2 Session Overview

3 Session Overview 1. Registering for FBT 2. FBT rebates and exemptions an introduction 3. Tips for completing an FBT return 4. Recent changes to FBT affecting NFPs UNCLASSIFIED FBT for NFPs 3

4 1. FBT An Introduction

5 FBT An Introduction What is a fringe benefit? A benefit provided to an employee or associate in respect of employment. > Generally relates to non-cash items; > Payments such as salary or wages, termination payments, complying superannuation contributions and employee share scheme benefits are NOT fringe benefits; > Many benefits are FBT exempt either because of the type of benefit or the employer category; and > Benefits provided to contractors and volunteers are generally not subject to FBT UNCLASSIFIED FBT for NFPs 5

6 FBT An Introduction What is fringe benefit tax? A tax paid by employers on fringe benefits provided to their employees. > Payable on lodgment of an annual return; > FBT year is from 1 April to 31 March; > Current FBT rate is 49%; > Quarterly instalments may be required. UNCLASSIFIED FBT for NFPs 6

7 FBT An Introduction Who has to register for FBT? You need to register for FBT when you are providing fringe benefits and have to pay FBT > You can register: By phone, calling , select option 3 and then option 3 again; Lodge an Application to register for fringe benefits tax (QC27382) using Business or Tax Agent Portals, mail or fax. > With changes to salary packaged entertainment, some NFP entities might need to lodge an FBT return for the first time, in particular FBT-exempt employers. > 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 , then select option 3 and then option 3 again for lodgment deferrals Call , for payment arrangements UNCLASSIFIED FBT for NFPs 7

8 FBT An Introduction Types of fringe benefits Each category has specific valuation rules > Car > Loans > Debt waivers > Expense payments > Housing > Board > Property > Living away from home allowances > Income tax exempt body entertainment > Car parking > Meal entertainment > Residual An employer to have policies, procedures and systems in place to record the provision of benefits. > There are record keeping rules in the FBT legislation. > The ATO website has more information about these rules. (QC 17812) UNCLASSIFIED FBT for NFPs 8

9 FBT An Introduction Rates & Thresholds for 2017 FBT year 31 March March 2018 FBT rate 49% 47% Type 1 gross-up rate Type 2 gross-up rate Reportable fringe benefits threshold for reporting on payment summaries (grossed up value) $3,921 $3,773 FBT concession for PBIs (other than public hospitals) and health promotion charities FBT exemption capped at $31,177 FBT exemption capped at $30,000 FBT concession for public hospitals, non-profit hospitals and public ambulance services FBT exemption capped at $17,667 FBT exemption capped at $17,000 FBT concession for rebatable employers FBT rebate of 49% capped at $31,177 FBT rebate of 47% capped at $30,000 UNCLASSIFIED FBT for NFPs 9

10 FBT An Introduction Rates & Thresholds for 2017 FBT year > Benchmark interest rate 5.65% refer to Taxation Determination TD 2016/5 > Car parking threshold $8.48 refer to Taxation Determination TD 2016/7 > Private use of motor vehicles other than cars refer to Taxation Determination TD 2016/3 - Engine capacity up to 2,500cc 52 cents per km - Engine capacity over 2,500cc 63 cents per km - Motorcycles 16 cents per km > Indexation rates for non-remote area housing benefits refer to Taxation Determination TD 2016/1 > Reasonable food and drink expenses incurred by employees receiving a living away from home allowance refer to Taxation Determination TD 2016/4 > Record-keeping exemption threshold $8,286 refer to Taxation Determination TD 2016/2 UNCLASSIFIED FBT for NFPs 10

11 FBT An Introduction Key FBT dates for 2017 Date Obligation 22 May 2017 Final date for appointing a tax agent for FBT. Lodge and pay FBT return. Final date for states and territories who want to nominate an eligible state or territory body as an employer, or vary, or revoke a previous nomination. 29 May 2017 The due date for payment. 26 June 2017 Lodge 2017 Fringe benefits tax annual return for tax agents (if lodging electronically). Payment (if required) is due 29 May UNCLASSIFIED FBT for NFPs 11

12 2. FBT rebates and exemptions an introduction

13 FBT rebates and exemptions an introduction Overview 2 Concessions available: > FBT-exemption subject to certain capping rules; or > A 49% FBT rebate subject to certain capping rules. Exempt employers (s 57A FBTAA): Registered public benevolent institutions Public hospitals and certain not-for profit hospitals Public ambulance services Registered health promotion charities Rebatable employers include: Registered charities Non-government public educational institutions Sporting clubs and associations Art, literature and music associations Community service clubs Employer associations Trade unions Note: some conditions may apply UNCLASSIFIED FBT for NFPs 13

14 FBT rebates and exemptions an introduction Overview Some exemptions apply for specific benefit categories > Benefits provided by a registered religious institution to a religious practitioner in respect of pastoral duties > Some benefits provided by a registered religious institution to domestic employees e.g. a housekeeper > Some benefits provided to live-in residential care workers > Car parking benefits provided to employees of a scientific, religious, charitable or public educational institution > Remote area housing benefits Note: some conditions may apply UNCLASSIFIED FBT for NFPs 14

15 FBT rebates and exemptions an introduction Endorsement required for some employers ACNC endorsement required to access FBT concessions for: > Public Benevolent Institutions, Health Promotion Charities and Charitable Institutions. > These employers must verify their endorsement status. > This information can be checked on the ACNC website. UNCLASSIFIED FBT for NFPs 15

16 FBT rebates and exemptions an introduction Relevant caps Rebatable employers > Receive a rebate on the fringe benefits tax that would otherwise be payable. > Rebate is equal to 49% of the gross FBT payable, subject to a $31,177 capping threshold (per employee) > Any additional benefits over the cap are subject to full FBT. Exempt employers > The exemption is limited to certain benefits and either capped to: $17,667 if the employee works for certain public hospitals; $31,177 if the employee works for PBIs or certain registered health promotion charities. UNCLASSIFIED FBT for NFPs 16

17 FBT rebates and exemptions an introduction Relevant caps Salary packaged meal entertainment and entertainment facility leasing expenses > From 1 April 2016 salary packaged meal entertainment and entertainment facility leasing benefits are subject to a gross up cap of $5,000. > The cap is in addition to the existing caps for exempt and rebatable employers. > Where the relevant cap (either $17,667 or $31,177) has been exceeded for an employee in a FBT year, the excess amount is reduced by $5,000 or a lesser amount represented by the employee s grossed-up taxable value of salary packaged entertainment benefits. > Example: An employee of an exempt FBT employer (relevant cap $31,177) has received the following grossed up benefit: $20,000 in child care expenses and $15,000 of salary sacrificed meal entertainment. Excess over the $31,177 equal to $3,823 / can be further reduced to nil with the new $5,000 cap. > For more information refer to Information for employers (QC 48052) Information for employees (QC 48053) UNCLASSIFIED FBT for NFPs 17

18 3. Tips for completing an FBT return

19 Tips for completing an FBT return For FBT-exempt employers Changes to the calculation of the relevant caps > Changes to the way these employees have traditionally determined their FBT liability if salary packaged meal entertainment and EFLEs were provided. These entities might be required to register and pay FBT for the first time. > Example on the operation of the new caps: - John is employed by a PBI and receives the following benefits during the current FBT year: salary packaged school fees for a grossed-up taxable value of $28,000 and salary packed meal entertainment for a grossed up taxable value of $9, His grossed-up taxable value is $37,000meaning the general cap is exceeded by $5,823. He can, however, further reduce the grossed-up taxable value of his benefits by $5,000 for the salary packaged meal entertainment - The PBI will have an FBT liability for 2017 FBT year / in prior year the $9,000 would have been an excluded benefit not counted towards the threshold. UNCLASSIFIED FBT for NFPs 19

20 Tips for completing an FBT return For rebatable employers Changes to the calculation of the relevant caps > Like in the past, these categories of employers will have to determine the FBT liability and then calculate the relevant FBT rebate. > No rebate can be claimed for the excess over the $31,177 and $5,000 caps of the grossed-up taxable value of fringe benefit provided to a particular employee for an FBT year. UNCLASSIFIED FBT for NFPs 20

21 Tips for completing an FBT return Some benefits are excluded All concessionally treated employees > For the purpose of the application of the capping rules the following benefits are excluded: Examples: Car parking benefits (s 39 FBTAA); or Benefits that have a nil taxable value. > The new $5,000 cap is applicable only to salary packaged entertainment benefits, and cannot be used by employers for other types of benefits (for example not available for salary packaged child care costs). > Non-salary packaged meal entertainment or entertainment facility benefits are not counted towards the capping thresholds. > Identify the correct cap that applies to you and ensure you are registered if ACNC (if required to). UNCLASSIFIED FBT for NFPs 21

22 Tips for completing an FBT return Practical suggestions Read the instructions and seek advice when in doubt! > Refer to instructions for completing your FBT return For more information refer to Accessing 2017 FBT Return and Instructions (QC & 50960). > Report all the benefits to provide and have a system in place to keep track of those benefits that are given to your employees. ATO Employer Guide can assist with this. > Ensure you are lodging the return for the correct year. > Report correct ABN (if you have one). > Complete all required items e.g. address changes, benefit details, tax calculations, declaration. > You do not need to lodge an FBT return if you FBT liability is nil, however if you are registered please lodge an FBT non-lodgement advice (QC 34573). UNCLASSIFIED FBT for NFPs 22

23 4. Recent changes to FBT affecting NFPs

24 Recent changes to FBT affecting NFPs Legislation Single touch payroll > Employers with 20 employees can choose to report to the ATO through STP from 1 July > This change will mean the grossed up value of RFBA provided by non-exempt employers will be added to ATI. The de-grossed/taxable value of RFBA will continue to be added to ATI for employees of exempt employers > It will become mandatory for all employers from 1 July Increasing the small business entity threshold not yet enacted > Reduces the corporate tax rate and increases the small business entity threshold. > If the change is enacted, the existing FBT concessions for small business entities will be extended to entities with an aggregated turnover of less than $10m. UNCLASSIFIED FBT for NFPs 24

25 Recent changes to FBT affecting NFPs Legislation Multiple work-related devices An FBT exemption will be allowed for small businesses providing their employees with multiple work-related devices from 1 April 2016, even where the items have substantially similar functions. A single cents per kilometre rate From 1 April 2016, there: is a single cents per kilometre rate of 66 cents to be used for calculating work-related car expenses. However, the Commissioner has been given the power to set the rate for future years; are only two methods to calculate work-related car expenses: the logbook method and the cents per kilometre method; are limits that apply to FBT concessions on salary packaged entertainment benefits. UNCLASSIFIED FBT for NFPs 25

26 Recent changes to FBT affecting NFPs Reportable Fringe Benefit Amount Fringe benefits change and adjusted taxable income > Applies from 1 January 2017 > The grossed-up value of reportable fringe benefits amounts (RFBA) will be used for the purposes of calculating adjusted taxable income (ATI) and reported on employees PAYG payment summary > It changes the way in which fringe benefits are treated under the income tests for many means tests > It does not apply to fringe benefits provided by certain not-for-profit employers that are exempt from fringe benefits tax, including health promotion charities, registered public benevolent institutions and public hospital and ambulance service > For more information Reportable fringe benefits facts for employees (QC 16122) and Fringe benefits change and adjusted taxable income (QC 48707). CLASSIFICATION Title of presentation 26

27 Recent changes to FBT affecting NFPs Reportable Fringe Benefit Amount PAYG Summary Payments Changes > For Payment Summaries and onwards, the employer will be required to check a box YES / NO to indicate whether the employer is an FBT exempt employer. This disclosure is required for the calculation of the ATI and will be used by the Department of Human Services/Centrelink UNCLASSIFIED FBT for NFPs 27

28 Recent changes to FBT affecting NFPs Practical Compliance Guidelines > PCG 2016/1 Practical Compliance Guidelines: purpose, nature and role in ATO s public advice and guidance > PCG 2016/10 Fleet Cars: simplified approach for calculating car fringe benefits > Ongoing consultation with the community via FBT Safe Harbour Working Group to identify opportunity for administrative guidance on specific issues. UNCLASSIFIED FBT for NFPs 28

29 Recent changes to FBT affecting NFPs ATO website updates > Recordings of FBT-related webinars are available on the ATO s Let s Talk website > Fringe benefits tax and not-for profits video > Not-for-profit FBT calculator (QC 17238) > FBT meal entertainment and entertainment fact sheets (QC 48432) have been issued > Non-Profit News Service (QC 17084) > Accessing 2017 FBT Return and Instructions (QC & 50960) > Employer Guide (QC 16123) > Updates to cents per kilometre factsheet and FBT calculators-car (QC 17212) > Updates to what types of vehicles may qualify for the FBT exemption UNCLASSIFIED FBT for NFPs 29

30 Thank you for your participation! ato.gov.au/non-profit or contact the ATO NFP service on (8am to 6pm Monday to Friday)