• Terms and acronyms used

    Term/Acronym

    Explanation

    12 week register method

    One method for calculating the taxable value of the meal entertainment is to keep a 12 week register of entertainment provided and, based on this register, determine the percentage of entertainment that is provided to employees or their associates. This is known as the 12 week register method. A 12 week register may also be maintained to calculate the number of car parking benefits provided.

    50/50 method

    One method for calculating the taxable value of the meal entertainment is to pay FBT on 50% of the total value of meal entertainment provided to employees and non-employees. This is known as the 50/50 method. The 50/50 method may also be used to calculate the taxable value of entertainment facility leasing expenses.

    AGS

    Australian Government Service (AGS) number is an Australian Government identifier for employees.

    Associate

    An associate of an Australian Government entity is an Australian Government department, an executive agency, a statutory agency or an authority of the Commonwealth.

    State and territory government entities are not associates of Australian Government entities for FBT purposes.

    An associate of an employee is defined in section 318 of the Income Tax Assessment Act 1936 and includes:

    1. A relative of the employee.

    2. A partner of the employee, where the employee is a partner in a partnership.

    3. A spouse or child of a partner covered by point 2.

    BAS

    Business activity statement

    Benefit

    Includes any right, privilege, service or facility.

    CEI

    Chief executive instructions (CEIs) are the high level guidelines issued by entities outlining the procedures to be followed in undertaking business transactions.

    CFO

    Chief Financial Officer

    Declaration

    A written statement providing information relating to a fringe benefit.

    Employee

    Either a:

    • former employee
    • current employee
    • future employee.

    An employee is generally someone who receives, or is entitled to receive, salary and wages in return for work or services provided.

    For fringe benefits tax purposes, 'employee' includes company directors, office holders and common law employees.

    EVS

    Executive vehicle scheme

    Excluded fringe benefit

    Fringe benefits that are not included in an employee's individual fringe benefits amount and are not required to be reported on payment summaries. For example, meal entertainment fringe benefits, car parking fringe benefits, entertainment facility leasing expenses and certain remote area benefits.

    Exempt benefit

    Benefits that are legislated to be exempt.

    FBT

    Fringe benefits tax

    FBTAA

    The Fringe Benefits Tax Assessment Act 1986 (FBTAA) establishes the rules for assessing and collecting FBT.

    FBT return or annual return

    An annual FBT return for the period 1 April to 31 March must be lodged with the ATO by 21 May each year, unless an extension of time to lodge has been granted by the ATO.

    FBT year

    1 April to 31 March.

    Fleet provider

    A third party that provides executive vehicle scheme vehicles or salary packaged vehicles.

    FMIS

    Financial management information system

    Fringe benefit

    A benefit provided in respect of employment. This effectively means a benefit provided to an employee or their associate because that person is an employee. The employee may be a current, former or future employee.

    GST

    Goods and services tax

    HECS

    Higher Education Contribution Scheme

    HELP

    Higher Education Loan Program

    HPC

    Health promotion charity

    iCMS

    The integrated credit management system (iCMS) is a computerised system for the management of corporate credit cards.

    ID

    In the context of an employee, it means identification number (ID).

    ITAA 1997

    Income Tax Assessment Act 1997

    ITC

    Input tax credit (ITC) is the GST that has been paid on business inputs.

    LAFHA

    Living-away-from-home allowance (LAFHA) is an allowance the employer pays to an employee to compensate for estimated expenses incurred, or estimated expenses and any disadvantage suffered, because the employee is required to live away from their usual place of residence in order to perform employment duties.

    Otherwise deductible rule

    The taxable value of a benefit may be reduced by the amount that an employee would have been entitled to claim as a once only income tax deduction. This is known as the otherwise deductible rule.

    PAYG

    Pay as you go

    PBI

    Public benevolent institution

    RFBA

    Reportable fringe benefit amount (RFBA). Any employer who provides non-excluded fringe benefits to an employee or their associate with a total taxable value of more than $2,000 for an FBT year (1 April to 31 March) must record the grossed-up taxable value of the benefits on the employee's payment summary for the corresponding income year (1 July to 30 June). The gross-up rate is always 1.8692, regardless of whether the benefits provided to the employee are type 1 or type 2 benefits.

    SES

    Senior Executive Service

    Taxable value

    The value of a fringe benefit before it is grossed-up. This may be the actual amount paid for the benefit or an amount calculated according to a formula specified in the FBTAA.

    Type 1 benefit

    The type 1 gross-up rate is used where the provider of the benefit is entitled to claim an ITC in respect of the benefit provided, whether or not the ITC was claimed.

    Type 2 benefit

    The type 2 gross-up rate is used where the provider of the benefit is not entitled to claim an ITC in respect of the benefit provided.

      Last modified: 17 Jul 2012QC 21998