FBT. Step 2 Excluded? S136(1) Salary or wages Superannuation contributions Employee share scheme Payments on termination of employment lc

Transcription

1 1 FBT Tax the provision of FB=> imposed on the employer s66(1) FBT year: 1 April -31March FB? 4 elements Exclusions? Categories=> TV Exemption? Specific/Div 13 Reduce TV? RR/ODR Type 1/Type 2 => FBT taxable amt FBT liability (tax rate) Step 1 FB? 1) A benefit s136(1) FBTAA: - Rights, privilege, service or facility provided under an arrangement in relation to the performance of work. - Repayment of loan by the employer to the employee benefit Provided during the year of tax s136(1) FBTAA 2) By following person Employer Associate of employer current, former, future employers Natural person (relatives: s995-1 of ITAA97, spouse, parent, grandparents, sibling, uncle, aunt, nephew, niece, lineal descendantdaughter/son, adopted child) or Company (formally/informally) controlled by employer 3 rd party s136(1)(e) FBTT provided to the employee by a 3 rd party, 3 rd party does so under an arrangement with the employer. Payne v FCT => TR 99/6 (not arranged by employer, so not FB) 3) To an employee or an associate: Employee Current, former, future Associate of Deemed associate: benefit prd due to an arrangement between the employee employer and the employee s148(2). MT 2019 Shareholder employee associate 4) In respect of the employment of the employee J & G Knowles & Associates Pty Ltd Sufficient and material relationship between Shareholder/employee/ director the employment and the provision of the unclear, not irf benefit. Emma, irf study, not clear NAT1054: It would be in respect of employment if he wouldn t receive the benefit if he was not an employee. Step 2 Excluded? S136(1) Salary or wages f Superannuation contributions j Employee share scheme H Payments on termination of employment lc

2 2 Step 3 Categories, Taxable value, Exemption Categories Taxable value Exemption Car DW def:s7(1) provide car to EE for private use MT 2027: TF between H&W in the course of G AI, so => private use FB can exists when: S7(1)(a)(ii): available for private use. S7(2): car is garaged at or near the residence of an employee or an associate of the employee. AAT Case 9824: H&W, FB b/c car garaged at the home. Exception s7(2a): Ambulances, firefighting vehicles and police cars that are garaged at EE s H. MT 2021 &TD 94/16: employee, garaged at or near the employee s home when overseas. S7(3): custody and control (e.g. retains the keys) over the car and not used for EY S7(4): ER prohibits, but blind eye a. Statutory formula s9 TV=0.2 base value of the car number of days during that year of tax on which the car fringe benefts where provided by the provider Or b. Operating cost s10 TV= [C (100% BP)] R *C=operating cost number of days in that year of tax recipient s payment e.g. repairs and maintenance, registration and insurance Deemed depreciation and deemed interest Leasing costs if the car is leased by the provider s10(3)(a)(v) *BP= the business use percentage of the car during the holding period *R=the amount of the recipient s payment def :s14 the employee (or associate) is released from his or her obligation to repay all or some of that amount. MT2021: must be due to the employment relationship (generosity of EE) not for some other reason (e.g. irrecoverable). S53: FB related to the provision of a car FB(fuel costs), not expense FB Exempt benefits: s8(2): only used for work-related travel and any private use by the employee or an associate of the employee is minor, infrequent and irregular. s8(2)(a)(i): car= taxi, panel van, utility truck or other road vehicle, not designed to carrying ppl s8(3): Unregistered car Loan Expense TV=the loan that no longer needs to be repaid s15 def: s16fbtaa: provides an employee (or associate) with a loan. TV=Loan [statutory i acutal i] no.of days loan provided. no.of days in FBT year S18 Statutory interest rate: TD2015/8-1 Apr ~ 31 Mar. 2014=6.45%. - Yr start 1 Apr =5.95% def: s20fbtaa: expense incurred by the employee (EE committed to the exp.); or reimbursement/salary package In-house:S136(1): ordinary course of their services TV => property or residual FB s22a S17(1)&(2) interest provided interest prevailing at that time on similar loans to the public [fixed] S17(3)Loans to meet employment-related expenses in the next 6 months. S20A: no-private-use declaration =>exp. for work-related purposes only

3 3 Meal entert External: S136(1): not an in-house expense FB e.g.reimburses for the children s school fees. TV =amount incurred by EE s23 def: s37aa; 37AF: entertainment by way of food or drink; provided in accommodation/travel; a reimbursement of expenses incurred by an employee in relation to the above. Property TR 97/1food or drink entrainment? Social situation (lunch at a restaurant) =>Y Course meal =>Y At a hotel, restaurant/café=> Y Refreshment (morning tea for EE) =>N Morning/afternoon tea, sandwiches or light meals =>N work hours, overtime or travelling for work purpose => N 50/50 split -Applies automatically unless otherwise elected s37b FBTAA TV =half of the expenses incurred by the EEs37BA 12-week register - Total expense % of that expenditure relates to the provision of meal entertainment (i.e. provided to employees or associates, not clients) s37cb def: s40fbtaa ER provides (not use) EE (or associate) with property. S136(1): Property tangible: animals, fish, gas and electricity Intangible: real property (i.e. land and buildings), a chose in action (i.e. a right to sue). Excluded: Rights arising under a contract of insurance or a lease or licence. S41: Property supplied to employees and consumed on work premises. Residual S58P S58X: In-house:s42(1)(a)(ii) TV= 75% of lowest price charged to customers or Lowest price if sold to manufacturers/wholesalers/retailers; or Lower of arm s length cost & arm s length price. External: s43 TV=Cost to ER ss50&s51 def: s45fbtaa: use of the benefits e.g. provision of services for free or at a discount; the provision of caravans at work sites for the accommodation of employees; waivers of loan establishment fees. In-house TV= 75% of the lowest price charged to customers at arm s length or 75% of the cost to acquire benefit from the provider External: TV=Cost to ER ss50&s51 Division 13 Exempt benefits S47: Business operation facilities (e.g. toilets, tea and coffee making, water dispensers) S47(3): private use of business property provided wholly/principally for work purposes S47(2):childcare, recreational facilities located on the employer s premises Minor benefit (notional taxable value<$300) p205 Frequent and regular benefits => not minor benefits => not exempt s59p(f)fbtaa, TR 2007/12 Work-related items

4 4 S58Y: S58Z S58A primarily for use in the EE s employment. S58X (2): portable electronic device; computer software; protective clothing; briefcase; tool of trade. S58(3) & (4): one item of each type per employee per FBT year unless the item is a replacement item (non-transferable) e.g. 2 computer, only 1 exempt, the other one property FB Membership fees and subscriptions directly/ indirectly (Reimbursement) => trade or professional journal; use of corporate credit card; use of an airport lounge membership Single trip taxi travel beginning or ending at work place Employment interview or selection test Step 4 Deduction to TV? In-house FB: s62 1) per employee per FBT >$10,000 reduced by $10,000 2) <$10,000 reduced to $0 3) Not transferable Recipient s contribution Reduce TV by the amt of the recipient s contribution. Loan FB, DW, Car. Otherwise deductible rule =>Only to EE not associate Car, DW Exp. Payment because of reimbursement s22a(4) and 23 Reduce TV by the amt that would have been deductible if the employee paid for the benefit themselves. Step 5 Type 1 or 2 Type 1 GST FB taxable amt=taxable value (2014)/ (2015) Type 2 FB taxable amt =Taxable value (2014) (2015) DW, Loan Step 6 FBT liability FB taxable amt=type 1 FB taxable amt +type2 FB taxable amt FBT liability =FB taxable amount FT rate 1 Apr -31 Mar 2015: 0.47 / 1Apr. -31 Mar 2016: 0.49 Interaction with income tax Employer s deduction Claim a deduction for: FBT + the cost of providing the FB under s8-1 of ITAA1997 (car: cost of providing FB is not deductible, because it is capital expense, SN, overtime, depreciation expense, s methods) Employee s AI 1) FBT & s15-2=> FBT, says s23l ITAA36 2) FBT & s6-5=> IF satisfy 15-2, will not satisfy 6-5

5 5 ND =>D if incurred in the provision of FB is: s32-20 ITAA1997 High education contribution payment A relative s travel expenses Recreational club expenses Leisure facility expenses