Fringe Benefits Tax Working Group key messages 5 February 2020

The chair welcomed the Fringe Benefits Tax Working Group and reviewed action items.

Update on action items

Review of Taxation Determination TD 93/142

The ATO confirmed that to continue the possible review of TD 93/142 additional responses were required to confirm the details of the contractual arrangements.

Examples on tax-exempt body entertainment

Examples on tax-exempt body entertainment were re-worked following members' feedback from the last working group session. We are receiving final internal review, and will be circulated to the members before publication.

Associate leases and employee contributions

The ATO confirmed feedback was received from the members and ATO will report back at the next meeting.

Share rewritten Chapter 7 Fringe Benefits Tax Guide

The ATO is continuing work on the review of Chapter 7 - Car fringe benefits of Fringe benefits tax - a guide for employers .The ATO will share the Chapter with the members before publication.

Additional payment for balancing FBT liability

The ATO shared the suggestion with the relevant area for consideration for any legislative reform.

Proposal to include additional paragraph in Taxation Ruling TR 2011/3

Members expressed general concerns regarding large upfront payments being made by employees to reduce the cost of a car when entering certain salary packaging arrangements, with the aim of reducing Fringe benefit tax (FBT) liability for the employers.

Members asked for clearer guidance to ensure clients understand the operation of the law in these circumstances.

50/50 valuation method for the entertainment industry

One of the members suggested the development of a practical compliance guideline to assist employers in the entertainment industry with the record keeping requirements relating to meal entertainment.

Businesses operating a bar or restaurant are required to include all the cost of goods sold (COGS) if they were to use the 50/50 valuation method. The member asked whether it would be possible to have an approach were COGS could be excluded without the need for the employer to adopt the actual valuation method.

Extending the due date for payment of an employer’s FBT liability

Two members asked whether the ability to provide an extension for payment of an FBT liability is provided in section 255–10 of Schedule 1 to the Taxation Administration Act 1953 (TAA). This section allows taxpayers using the services of a tax agent to obtain an extension until 28 May to pay the balance of the FBT liability.

Policy Advice and Guidance update

The draft car parking ruling - TR 2019/D5 was published on 13 November 2019. A large number of submissions were received and were currently being worked through.

TR 2019/D7: Income tax and fringe benefits tax: when are deductions allowed for employees’ travel expenses? This new draft ruling is relevant for FBT for the purpose of the application of the otherwise deductible rule. The draft partially replaces draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? Separate products are being developed to update our view regarding the additional topics currently included in TR 2017/D6 (meal, accommodation and other incidentals).

Attendees

Apologies