Fringe Benefit Client Questionnaire

Transcription

1 Fringe Benefit Client Questionnaire This attachment has been prepared to aid you in completing your Fringe Benefit Client Questionnaire. The purpose of this attachment is to provide you with more information regarding Fringe Benefits Tax (FBT) so that we may help identify fringe benefits and reduce your potential exposure to penalty taxes and interest. We will be happy to provide further information and also refer you to the Australian Taxation Office publications Fringe Benefits Tax A Guide for Employers NAT The following is an explanation of the major types of benefits that are potentially caught in everyday business dealings. Please note that each of the benefits described has various inclusions, exclusions and exemptions that can t be explained in detail here. However, these can be considered once we have identified whether a particular type of benefit has been provided. 1. Motor Vehicles Motor Vehicles are by far the most common fringe benefit. Essentially, this type of benefit arises where an employer s car is used by an employee for any private purposes, notwithstanding that the vehicle is also used for business purposes. Generally, this situation arises where an employee is provided with a vehicle for travel between work and home and the car is parked at the employee s home or the employee uses a vehicle for any other private use. The Fringe Benefits Tax Assessment Act (FBTAA) allows two methods for calculating the taxable value of the motor vehicle fringe benefit - 1. Statutory Formula Method 2. Operating Cost Method We recommend providing us with details to calculate the taxable value under both the above methods; this then enables us to choose the method which gives you the best result for FBT purposes. The Statutory Formula method calculates the taxable value of the benefit depending on how many kilometres have been travelled during the FBT year. For cars purchased on or before 10 May 2011, the more kilometres travelled the lower the taxable value. The record keeping for the operating cost method is much more onerous than the statutory formula method but this can, in many circumstances achieve a lower FBT result. The taxable value is calculated by applying the log book percentage against the costs of operating the vehicle for the FBT year. Even after we have done all the calculations, we may reduce the taxable value of the fringe benefit to nil through employee reimbursements or contributions. This can actually be paid in cash (e.g. employee pays for petrol) but is usually performed by way of a journal entry against your loan account (i.e. reducing your loan balance with the company). Even though we may not physically lodge an FBT return in many cases, we still need all of the information to perform the necessary calculations which enable us to provide you with an appropriate journal entry.

2 2. Loan Benefits A loan fringe benefit arises where an employer makes a loan to an employee, including a director, for these purposes a loan includes: 1. Advance of money including salary advances 2. Provision of credit 3. Payment of an amount on behalf of another person where that person has an obligation to repay. The loan fringe benefit amount is the amount of interest that would be payable on the loan using the benchmark interest rate of the year. The focus of this type of benefit is on directors or shareholders debit loan balances with their companies. A debit loan balance is where the director owes the company money. If your loan account has gone into debit at any time during the FBT year we will have to obtain details of the movements to calculate the statutory interest, which is at the rate of 7.4%. A general ledger printout of the loan account gives us most of the information to enable us to do the calculations. We may already have prepared some accounts for you during the year and have details of these movements. Alternatively, these details may need to be compiled now. If these loans are used for income producing purposes (e.g. an employee has borrowed money from the company to buy shares) there will be no taxable fringe benefit but we will still need to do the calculations for substantiation purposes. If interest is already being charged on the loan (e.g. a loan to an employee) then we will need the interest rate charged or the interest actually charged in order to calculate the taxable fringe benefit. Note: A loan of property is not a loan benefit; this is defined as a residual benefit, which is discussed in a later section. 3. Debt Waiver Benefits A taxable benefit arises where an employer releases an employee from a debt. The taxable value is the amount waived, so therefore we will require this information if applicable. Please provide the following for each debt waiver: * name of employee * amount of debt waiver * date of debt waiver

3 4. Expense Payment Benefit An expense payment benefit arises where an employer pays or reimburses private expenses incurred by employees, including directors. Examples of such expenses include: Children s school fees Home office computers Private telephone accounts Electricity, gas (heat & power) Rates and land taxes Medical and health benefits Insurance premiums Travel/credit cards Drivers licence Mortgage/loan payments Holiday transport Other - please ask us if you have any queries In most cases, where the employee would have been allowed a once only tax deduction for the expense if the employer had not paid or reimbursed it, then the taxable value is reduced to the extent it is deductible. We will need the following details in relation to expense payment fringe benefits: 1. The name of the employee for whom it was paid. 2. The date, nature and amount of the payment 3. The extent to which, if any, that the payment is tax deductible to the employee Note: Any item for which depreciation will be claimed is excluded from being a once only deduction 5. Housing Benefits A housing fringe benefit arises where an employer provides an employee a right to occupy or use accommodation as a usual place of residence. This accommodation includes the following: house, flat, unit, hotel, motel, guesthouse, bunkhouse, ship, oil rig, caravan or mobile home. If the accommodation cannot be described as the employee s usual place of residence then the benefit will not be a housing benefit, but will be a residual benefit. Note: Accommodation whilst travelling on business will definitely not be a housing benefit. Depending on the circumstances, expenditure of this type may be fully tax deductible. 6. Living Away From Home Allowance (LAFHA) Benefits A LAFHA benefit arises where an employer compensates the employee for the additional expenditures he is obliged to incur in providing board and accommodation for himself at his place of employment while, at the same time, maintaining his home elsewhere. From 1 October 2012, the following FBT changes have been introduced to LAFHA-based benefits: 1. Employees are required to maintain a home in Australia for their immediate use and enjoyment whilst they are living away from home; 2. The concessional valuation rules for certain LAFHA-based fringe benefits will be limited to the first 12 months that the employee is actually living away from home at the one location (referred to as the 12-month rule); 3. New substantiation requirements must be satisfied before the taxable value of a LAFHA-based fringe benefits can be reduced, which vary according to the type of expense being incurred; 4. There are special concessions that apply for employees regarded as being under fly-in-fly-out or drive-in-drive-out employment arrangements;

4 5. There have also been changes to the declaration requirements that must be satisfied before the concessional tax treatment applies to LAFH-based benefits. The extent to which a LAFHA benefit is subject to FBT will be determined on the basis of the facts, so please provide as much information as you can about such an arrangement if you think it applies to you. 7. Car Parking Fringe Benefits Car parking facilities provided by an employer to an employee may give rise to a car parking benefit. A car parking benefit arises where the following conditions are satisfied: A car is parked on business premises which is within 1 km of a commercial parking station and the car parking station s fee for all day parking is more than $7.83 from the first day of the FBT year (i.e. from 1 April 2012) the car is parked on the business premises for more than 4 hours in total from 7am to 7pm on the particular day the provision of car parking facilities is in respect of the employee s employment the car is parked at or in vicinity of the primary place of the employee s employment the car on that day is used in connection with travel from home to work As there are five methods of calculating the taxable value of a car parking fringe benefit, you will need to discuss your circumstances with us to determine the information you may need to provide. However we will generally need to know how many car parking spaces can reasonably be used by employees and the lowest commercial car park rate charge within 1 km of your business. 8. Property Benefits A property benefit arises when an employee is provided with free or discounted property by the employer. Property includes goods, real property such as land and buildings and chooses in action such as shares and bonds. If you have provided employees with any goods during the year please provide as many details as possible (i.e. what was provided) to determine whether a fringe benefit has been provided. Food and drink consumed by current employees on a working day on the employer s premises is an exempt property fringe benefit. (note: this does not apply if you elect the 50/50 method for meal entertainment). Note: Property is provided when the ownership passes. If ownership does not pass e.g. the employee used the property for a time then this would be classified a residual benefit. See below. 9. Entertainment This is one of the most complex areas of tax law. Depending on the type of entertainment provided and the circumstances in which the benefit was provided, entertainment could be included in a number of fringe benefit types. However at this stage we are only asking you to determine whether you potentially provided a benefit entertainment benefit for FBT purposes. Entertainment includes provision of food, drink or recreation (eg. taking out employees to a restaurant and staff social functions). However meal entertainment has to be separately identified as it contains special valuation rules and are also excluded from reportable fringe benefits.

5 Meal Entertainment Fringe Benefits Meal entertainment fringe benefit consists of entertainment by way of food and drink, travel and accommodation in connection with the entertainment is also included, (eg. taxi, travel to a restaurant) The taxable value can be calculated as follows: 1. Election to use the 50/50 split method or 12 week register method 2. If no election is made, the actual expenditure is used We will generally calculate the Fringe Benefit Tax implication under the 50/50 method and the actual method to determine which gives the best FBT result. There are some circumstances which the provision of food and drink may not constitute as meal entertainment fringe benefits. These include: 1. Staff amenities 2. Morning and afternoon tea 3. Food or drink provided to employees while on business travel overnight 4. Food and drinks provided at continuing professional a seminar We only require you to provide details that would give rise to a fringe benefit, however, it also gives us the opportunity to determine whether items of entertainment are tax deductible. Giving us more details about these transactions will aid us in completing your year end tax returns. To help us determine the FBT consequences please provide us with the following details: 1. How many employees, family members or clients were involved 2. The situation when and where the food or drink is provided. Was it on the employer s premises, was the employee travelling on business 3. The amount of the expenditure involved and whether any of this expense was reimbursed. Although entertainment provided to clients is not subject to FBT, records must be kept on all entertainment (for both staff and client) when the 50/50 method or the 12 week register methods are used. Exemption Please note, although some meal entertainment may be exempt (eg. Under the minor benefits exemption or the exemption for the property benefits consumed on business premises) these will be included as meal entertainment fringe benefits if the 50/50 method or the register method are used. 10. Residual Fringe Benefit Essentially, any other benefits you may have provided to employees in respect to their employment are covered by residual fringe benefits. Examples of residual fringe benefits are free or discounted services, such as travel or performance of work, the use of property and the provision of insurance coverage. The provision of vehicles other than cars, (e.g. hire taxis, rental cars, trucks and motor cycles) also fall under this category. Please call your business adviser at Kreston Dormers to discuss any potential residual benefits you may be providing to employees. 11. Contributions to Worker Entitlement Funds A worker entitlement fund is a trust fund for employee long service leave, sick leave or redundancy payments. These funds are also referred to as redundancy trusts or redundancy funds. If you are an employer who makes payments to a worker entitlement fund, you need to ensure that the fund is prescribed. Paying into a prescribed fund will ensure you do not pay FBT on the amounts paid into the funds.

6 12. Exempt Benefits The FBTAA has various exemptions relating to every category of fringe benefits. They are not all covered here, however please note the following tax deductible, but FBT exempt, items an employer may provide to an employee, called Eligible work related items. The Eligible work related items include: 1. Mobile or car phones used primarily in the employee s employment 2. Protective clothing required for employment of the employee 3. Briefcases 4. Calculator 5. Tools of trade 6. Computer software used in the employee s employment 7. Electronic diary or similar 8. Notebook computer, laptop or similar portable computer. Only relates to lighter, portable computers. Please note the above items must be used primarily by the employee at work. If you have any queries in relation to any of the above please do not hesitate to contact us for further information. Minor Benefit Exemption Broadly the minor benefit exemption applies when a benefit provided to an employee is less than $300 and the benefit provided is of a not frequent and irregular nature. Please contact your Kreston Dormers adviser if you feel this applies to you.

7 Form 1 Fringe Benefits Tax Questionnaire Client: Date: Thank you for investing the time to complete this questionnaire. Please return the questionnaire and the relevant attached schedules to us as soon as possible. About Fringe Benefits Tax There are many different types of Fringe Benefits to consider. In order to determine which ones are applicable to your business for the year please respond to the following questions. (If you require further explanation regarding the nature of these benefits please call us.) We have referred to you as the employer (including all associates and third parties under arrangement with you) 1. Benefits Paid Yes No? 1.1 Has any non-cash benefit been provided during the year to past, present or future employees including associates or third party arrangements to employees or their associates such as providing a company maintained car, or low interest loan? 2. Motor Vehicle Benefits Yes No? 2.1 Have any cars (employer owned or leased) been used privately or made available for private use by the employees or associates (including working directors) during the year. A car is available for private use on any day that the car was garaged at or kept near a place of residence of an employee or associate. If the answer is no, you do not need to complete this section. If yes, please complete the attached Form 2 Motor Vehicle Schedule. 2.2 Have you disposed of or purchased any motor vehicles during the FBT year? If yes, please show details on Form 2 and provide copies of the invoices. 2.3 Have you taken a record of the Odometer Reading at 31/3/2013 for each car provided to employees/associates? 2.4 Do you pay expenses for any employee s/associate s personal vehicles (e.g. fuel)? 2.5 Do you reimburse lease payments?

8 2.6 Have you sold a motor vehicle to an employee at less than market value? 2.7 Have any motor vehicle leases been renewed, extended or paid out? Please provide details 3. Loan Benefits Yes No? 3.1 Has the employer or its associates provided a loan to any employee, director or their associates (including salaries paid in advance). The benchmark interest rate commencing 1 April 2012 is 7.4% 4. Debt Waiver Yes No? 4.1 Have you released any employees from a debt that was previously owed to you? 5. Expense Payment Yes No? 5.1 Have you paid any expenses on behalf of employees/directors? Including Motor Vehicle expenses for employee owned cars 5.2 Have you reimbursed employees/directors for any expenses paid by them? If yes, please complete Form 3 Expense Payments Benefits. 6. Housing Yes No? 6.1 Has any employee/director been provided with a right to use a dwelling as their usual place of residence? 7. Board Yes No? 7.1 Has the employer provided any employees with accommodation and two meals or more per day? Do you provide meals to employees/directors as a result of an industrial award or under an employment arrangement? 8. Living Away From Home Allowance Yes No? 8.1 Do you provide employees/directors an allowance or reimburse their accommodation and food costs when they are required to live away from their usual place of residence? 9. Airline Transport Benefits Yes No? 9.1 Do you provide employees/directors (of the travel industry) with free or discounted airline travel? 10. Property Benefits Yes No? 10.1 Do you provide property or goods to employees/directors that are normally sold as part of the business? 10.2 Do you provide property or goods to employees/directors or arrange with a third party to supply property to the employees at a discount or free that are not normally sold as part of the business?

9 11. Car Parking Yes No? 11.1 Do you provide car parking facilities to employees/directors? 11.2 Is there a commercial all day car park within a kilometre radius that charged more than $ 7.83 per day at the beginning of the 2013 FBT year? 12. Entertainment Yes No? 12.1 Have you or a third party under an arrangement with you provided meal entertainment to employees or their associates? If yes, complete the attached Form 4 - Entertainment Expense Schedule. 13. Residual Benefits Yes No? 13.1 Have you paid or provided any other benefits to employees/directors not included in the above? If yes, please provide details below: 14. Worker Entitlement Fund Yes No? 14.1 Have you made any contributions to a Worker Entitlement Fund? 14.2 Was the Fund an existing Fund at the time that the contributions were made? 15. Record Keeping Yes No? 15.1 Have you reviewed your cash book and/or financial statements to ensure all employee Fringe Benefits have been brought to account during the FBT year from 1 April 2012 to 31 March 2013? 15.2 Would you like us to perform a prudential FBT review of your business? A prudential FBT review is a thorough look at your business in order to establish if there are any fringe benefits issues that should be addressed Would you like any salary packaging advice? 15.4 Would you like us to explain the relevant FBT rulings relating to your business? Name: Signature: Date:

10 FORM 2 Motor Vehicle Schedule GST INCLUSIVE Fringe Benefits Tax 1 April 2012 to 31 March 2013 Vehicle 1 Vehicle 2 Vehicle 3 GST Inclusive GST Inclusive GST Inclusive SECTION A Name of driver^ (who used the car for private use during the year) Make/model Registration No. Purchase date Base Value * (see below) Odometer reading (or at purchase date if during the 2013 FBT year) Odometer reading (or at disposal date) Total Kms Travelled Disposal Date (if sold) Consideration Received $ $ $ Days not available for private use (eg being repaired) Expenses paid by employee and not reimbursed $ $ $ Purchase cost (please forward purchase and finance documents) $ $ $ ^ If car was used by more than one employee indicate the period of days used by each employee. * The base value of the car (being the cost price) is calculated using the following: - GST inclusive original cost or the leased value of the car (if under a lease arrangement) - GST inclusive cost of non-standard accessories added at and after acquisition. A one-third reduction is available where the car is held by the employer for more than four full FBT years.

11 GST INCLUSIVE SECTION B Vehicle 1 (GST inclusive) Vehicle 2 (GST inclusive) Vehicle 3 (GST inclusive) Has Log book been kept? No > No further details required Yes Please complete the schedule No > No further details required Yes Please complete the schedule No > No further details required Yes Please complete the schedule % of Private use (as per log book) Registration $ $ $ Date CTP Insurance $ $ $ Date Insurance $ $ $ Date Fuel & Oil $ $ $ Repairs & Maintenance $ $ $ Lease payments $ $ $ Other $ $ $ Date NOTE: - If a vehicle had more than one driver, please discuss this with us - Please record the GST inclusive value (if applicable) for each item above.

12 Form 2a Operating Cost (Log Book) Method Checklist Car registration number Name of usual driver of car (if any) 1. A log book must be kept for each vehicle using the operating cost method. A new log book must be prepared at least every five years. Employers that last kept a log book in the FBT year ended 31/3/2007 or an earlier year were required to keep a new log book in the FBT year ended 31/3/ Check the log book was maintained over a continuous period of at least 12 weeks plus odometer readings for that period. 3. Ensure the following details are recorded in the log book: When the log book period begins and ends The car s odometer readings at the start and end of the period The total number of kilometres the car travelled during that period Certain details related to each business journey, as follows: The dates on which each journey began and ended The kilometres travelled, and The purpose of each journey (note: an entry merely indicating business or miscellaneous business will not be sufficient) 4. Ensure odometer records are maintained showing the car s odometer readings at the start and end of the 2013 FBT year. 5. Make a reasonable estimate of the number of business kilometres travelled (in determining the car s business use percentage), taking into account: The information contained in the log book and odometer records, and Any variations in the pattern of use of the car related to, for example, the changing of jobs, a variation in employment duties, holidays, seasonal fluctuations, the employer relocating to another address, etc.

13 Expense Payments Benefits Form 3 Date Nature of Expense (e.g. school fees, private insurance) Amount (GST Exclusive) GST Name of Employee Otherwise Deductible Amount* *This is the amount the employee would have been able to claim as a tax deduction, if the expense had not been paid by their employer.

14 Entertainment and Recreation Expenses FORM 4 Depending on the circumstances, entertainment expenses incurred maybe treated as: Not deductible and not liable to FBT; Tax deductible and liable to FBT Or The determining factors are: Where the entertainment took place; and Who were the attendees (employees and associates, clients) Please provide the following information regarding all entertainment expenses paid from 1 April 2012 to 31 March Amount Date of Payment GST Excl GST Incl. Type of Entertainment (e.g. meals, tickets to sporting events, accommodation. or travel connected with entertainment) GST INCLUSIVE Location/Venue No. & name* of employees Attendees No. of Associates No of clients Owner (self employed) *Names are only required for recreation benefits such as tickets to events (not corporate box), corporate golf day etc. Note that if you are able to provide you with details of the FBT treatment of most entertainment and recreation expenses. Please contact our office should you require further information.