Read about recent events and changes affecting fringe benefits tax (FBT).
Proposed and recent law changes
Proposed law changes:
Recent law changes:
- Exemption for the private use of electric vehicles
- COVID-19 testing for work-related purposes and the otherwise deductible rule
- Access to certain FBT small business concessions
Proposed law changes
Changes to employee declarations
Under changes proposed to the FBT lawExternal Link, 'particulars of a car' will no longer be required for the following employee declarations:
- Overseas employment holiday transport (section 61A of the FBTAA)
- Relocation transport (section 61B of the FBTAA)
- Employment interview or selection test (section 61E of the FBTAA)
- Work-related medical examinations, medical screenings, preventative health care or counselling or migrant language training (section 61F of the FBTAA).
These changes are not yet law.
Changes to FBT record keeping
The government has announced it will provide the Commissioner of Taxation with the power to allow employers to rely on alternative records, such as existing corporate records where adequate, to finalise their FBT returns. This would be an alternative to employee declarations and other prescribed records.
If enacted, the changes will take effect from the start of the first FBT year (1 April) after the date of royal assent of the legislation. As it has not yet been enacted, the usual FBT record keeping obligations apply for the FBT year ending 31 March 2023.
Recent law changes
Exemption for the private use of electric vehicles
From 1 July 2022, employers won't pay FBT on benefits provided for eligible electric cars and associated car expenses. Benefits provided for electric cars are exempt from FBT if all the following criteria are met:
- the car is a zero or low emissions vehicle
- the first time the car is both held and used is on or after 1 July 2022
- the car is used by a current employee or their associates (such as family members)
- luxury car tax has never been payable on the importation or sale of the car.
For more information see Electric cars exemption and the Electric vehicles and fringe benefits tax fact sheet.
The fact sheet outlines what is required for a car benefit to qualify for the exemption, and the treatment of associated benefits that an employer may also provide to an employee. It also explains that even though an electric car benefit may be exempt, its taxable value must still be taken into account in working out the employee’s reportable fringe benefits amount.
COVID-19 testing for work-related purposes and the otherwise deductible rule
From 1 July 2021, individuals who buy or pay for a COVID-19 test for work-related purposes – such as to work out if they should attend or remain at work – can claim an income tax deduction for this expense.
If an employer buys, pays for or reimburses these expenses instead of the employee incurring the expense, the otherwise deductible rule may apply. This will reduce the taxable value of the expense payment, property or residual fringe benefit.
For information about testing to attend the workplace and the otherwise deductible rule, see FBT, COVID-19 tests and the otherwise deductible rule.
Access to certain FBT small business concessions
Under changes to the FBT and income tax laws, businesses with an aggregated turnover of $10 million or more and less than $50 million can access certain existing FBT small business concessions.
Eligible businesses can access:
- a fringe benefits tax exemption in relation to small business car parking
- a fringe benefits tax exemption in relation to the provision of multiple work-related portable electronic devices.
The changes to eligibility for the concessions apply in relation to benefits provided to employees from 1 April 2021 onwards.
The FBT guide for employers further explains car parking fringe benefits (chapter 16.1) and portable electronic device exemptions (chapter 20.8).
Administrative changes
Deferral of due date for balancing payment for FBT
The due date for the balancing payment for FBT for employers using tax practitioners who lodge FBT returns electronically has been deferred from 28 May to 25 June.
The due date of the balancing payment is now aligned to the due date of the FBT return lodgment date of 25 June for this class of taxpayers.
This deferral applies from the 2021 FBT year onwards. Note that 25 June 2023 falls on a weekend, so the due date for the 2023 year will be 26 June 2023 (the next business day).
Recent public advice and guidance
Electric vehicle home charging rate – calculating electricity costs when charging a vehicle at an employee’s or individual’s home
Draft Practical Compliance Guideline PCG 2023/D1 Electric vehicle home charging rate – calculating electricity costs when charging a vehicle at an employee’s or individual’s home was published on 31 March 2023.
This draft provides guidance on how employers with FBT obligations and individuals with work-related car expenses can calculate electricity costs when charging electric vehicles at an employee's or individual's home.
Employers and individuals can choose to use the methodology outlined in the PCG or they can determine the cost of the electricity by calculating its actual cost. The choice is per vehicle and applies for the whole income or FBT year.
The EV home charging rate can be used by employers who provide car fringe benefits for calculating a recipient contribution, and the cost of fuel to be included in operating costs. It can also be used where a reimbursement for car expenses is made by the employer to the employee.
Plug-in hybrid vehicles which have an internal combustion engine are not covered by this PCG.
Car fringe benefits
Chapter 7 – Car fringe benefits in FBT: A guide for employers has been refreshed to provide a step-by-step guide to identifying and calculating the taxable value of car fringe benefits.
Coronavirus (COVID-19) impacts
Businesses may have been impacted by COVID-19 and employers may provide their employees with benefits as a result. This may affect your FBT obligations. This includes allowing your employees to garage a work vehicle at home and paying for items that allow your employees to work from home.
To help you deal with FBT obligations in the context of COVID-19 we have information on our website, as well as fact sheets on our legal database regarding car fringe benefits and working from home benefits.
Car parking fringe benefits
Taxation Ruling 2021/2 Fringe benefits tax: car parking benefits was published on 16 June 2021.
This ruling finalises Draft Taxation Ruling TR 2019/D5. The ruling sets out when the provision of car parking is a 'car parking benefit' for the purposes of the fringe benefits tax legislation.
This ruling applies before and after its date of issue. However, to the extent that this ruling conflicts with views in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (withdrawn 13 November 2019), it will apply to car parking benefits provided on or after 1 April 2022.
Addendum TR 2021/2A1 was issued on 22 February 2023 to confirm the Commissioner’s views on the meaning of ‘primary place of employment’ for the purposes of the car parking benefit provisions, following the decision by the Full Federal Court in Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd[2021] FCAFC 209.
Deductibility of employee travel expenses
Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employee's transport expenses? was published on 17 February 2021. This ruling finalises Draft Taxation Ruling TR 2019/D7 and provides guidance on when an employee can deduct transport expenses under section 8-1 of the Income Tax Assessment Act 1997.
This ruling explains that generally, transport expenses for travel between home and a regular place of work do not have the required connection to employment income and are not deductible. In contrast, transport expenses incurred when travelling between work locations are generally deductible provided neither location is the employee's home. The ruling also explains a number of special cases or exceptions to these general rules.
This ruling applies in determining whether such expenses, if paid by the employer as a fringe benefit, would be 'otherwise deductible' if they had been incurred by the employee.
Travel-related food and drink expenses, travel allowances and living-away-from-home allowance (LAFHA)
Taxation ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances and living-away-from-home allowances was published on 11 August 2021. It finalises TR 2021/D1 and explains:
- when an employee can deduct travel-related accommodation and food and drink expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)
- the fringe benefits tax implications, including the application of the ‘otherwise deductible rule’
- the criteria for determining where an allowance is a travel allowance (as defined in subsection 900-30(3) of the ITAA 1997) or a living-away-from-home allowance benefit (under section 30 of the Fringe Benefits Tax Assessment Act 1986) and the differences between them.
Practical Compliance Guideline PCG 2021/3 Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location – ATO compliance approach was published on 11 August 2021. It outlines the ATO’s compliance approach to determining if employees in certain circumstances are travelling on work or living at a location away from their normal residence. It should be read in conjunction with Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances and living-away-from-home allowances.
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