Australia

Details

  • Service: Tax, International Executive Services
  • Type: Regulatory update
  • Date: 31/03/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Mardi Heinrich

Mardi Heinrich
Partner, Tax

+61 2 9335 7697

meheinrich@kpmg.com.au

Top 5 key issues to consider for the FBT season 

by Mardi Heinrich, IES Specialist

With fringe benefits tax (FBT) return deadlines approaching and a new FBT year about to start, the top five issues to consider are:
  1. Tricky transitional provisions
    Following the legislative changes in respect of car, living-away-from-home (LAFH) and in-house fringe benefits, the transitional provisions help soften the impact of the changes but add another layer of complexity from an administration perspective. Keep track of the relevant dates for the transitional provisions and watch for trigger points that bring benefits into the new regime (e.g. a new commitment for cars and material variations in a contract for LAFH and in-house rules).

  2. Classifying your mobile workforce
    Remember that how your mobile workforce is classified will impact the FBT concessions that may apply. Tax teams should be involved in the planning or project tendering stage to ensure the business is aware of the hidden FBT cost of structuring arrangements in a particular way. Are your employees fly-in fly-out, drive-in drive-out, travelling on business, relocating temporarily or relocating indefinitely?

  3. Using GST inclusive values
    This is (still!) the most common material error identified during our FBT return reviews. It is always the Goods and services tax (GST) -inclusive amount that must be included in any FBT calculation. If you are taking figures from a general ledger account that relate to GST-creditable benefits, you will generally need to multiply them by 1.1 to obtain the correct GST-inclusive amount.

  4. Tracking process improvements
    Start tracking potential process improvements this year as the FBT returns are prepared so that you can implement these for next FBT year. It’s good practice to keep updated documentation of your FBT process on file, it can be an excellent reference point in the event of an ATO review.

  5. FBT rate change
    The FBT rate will increase from 46.5 percent to 47 percent from 1 April 2014. There are corresponding changes to the FBT gross-up rates. Make sure your employee communications and salary packaging calculations are updated accordingly and that payroll is notified of revised amounts to be processed. The FBT rate change will decrease the amount of concessional benefits that can be accessed under the FBT rebate or exemption.

Finally, keep in mind that the FBT rate change will also impact the amount of payroll tax payable and ultimately your FBT instalments.

 

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