• A-K

    A

    Activity statement

    Used to report your business tax entitlements and obligations, including FBT instalments, goods and services tax (GST), pay as you go (PAYG) instalments and withheld amounts.

    Aggregate non-exempt amount

    The amount that exceeds the capping threshold of the grossed-up taxable value of benefits provided to employees.

    All-day parking

    The parking of a single car for a continuous period of at least six hours or more between the hours of 7.00am and 7.00pm on a particular day.

    Associate

    People and entities closely associated with you - such as relatives, or closely connected companies or trusts. A formal definition is contained in section 318 of the Income Tax Assessment Act 1936 and is modified by sections 148, 158 and 159 of the Fringe Benefits Tax Assessment Act 1986.

    Available for private use

    A car is considered to be available for private use if it is either:

    • not at your premises, and the employee is allowed to use it for private purposes
    • garaged at or near an employee's home.

    If a car is garaged at an employee's (or an associate's) home, it is treated as being available for their private use, regardless of whether they are actually allowed to use it privately. If the employee's home is their workplace, the car is considered to be available for their private use if it is garaged there.

    B

    Base value

    The base value of a car owned includes:

    • the original cost price paid
    • the cost of any fitted non-business accessories
    • dealer delivery charges, excluding registration and stamp duty charges.

    The base value of a car leased to an employer is the cost price or market value at the time the lease commenced.

    Base year

    For purposes of the record keeping exemption arrangements, this is the FBT year ended 31 March 1997 or any following year.

    Benchmark interest rate

    Also known as the statutory interest rate. This interest rate is published by the Commissioner of Taxation each year and must be used to calculate the taxable value of either:

    • a fringe benefit provided by way of a loan
    • a car fringe benefit where an employer chooses to value the benefit using the operating cost method.
    Benefit

    Includes any right, privilege, service or facility.

    Business premises

    Premises, or part of premises, that are used, in whole or in part, for the purposes of business operations.

    C

    Car

    The following types of vehicles (including four-wheel drive vehicles) are cars:

    • motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more)
    • all other goods-carrying vehicles designed to carry less than one tonne
    • all other passenger-carrying vehicles designed to carry fewer than nine occupants.
    Commercial parking station

    Is one that, in relation to a particular day, means a permanent commercial car parking facility where any or all of the car parking spaces are available in the ordinary course of business to members of the public for all-day parking on that day on payment of a fee. It doesn't include a parking facility on a public street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher.

    Cost price

    Generally, the expenditure incurred by you or the lessor for the acquisition or delivery of the car. Usually, this is the purchase price that has been paid, although there may be arrangements in place that have an impact on the cost price.

    For example, where an employee provides a trade-in, the cost price would be the purchase price minus the trade-in.

    Alternatively, where:

    • the transaction involves a payment by another person directly to a car dealer, the cost price would normally be the net amount you actually pay
    • an employee pays an amount directly to you, you will need to look at the terms of any agreements and contracts in place to determine whether this payment is an employee contribution or not.

     

    Attention

    An employee contribution doesn't reduce the cost price of the car.

    End of attention

    D

    Declaration

    A written advice given to an employer by an employee about the following information relating to fringe benefits received:

    • the percentage of business/private use
    • the reduction allowed under the 'otherwise deductible' rule.

    Declarations are required to be in a form approved by the Commissioner of Taxation. The approved wording and information to be contained in these employee declarations are included throughout the guide.

    Declaration date

    The date an employer is required to lodge their FBT return (21 May) for the FBT year, or such later date as the Commissioner of Taxation allows.

    E

    Employee

    Means a:

    • current employee
    • future employee, or
    • former employee.

    An employee is generally someone who receives, or is entitled to receive, salary and wages in return for work or services provided, or for work under a contract that is wholly or principally for the person's labour.

    For FBT, 'employees' includes company directors, office holders, common law employees and recipients of compensation payments.

    Employee or recipient's contribution

    Also known as a recipient's payment or recipient's rent.

    Generally, the payment is a cash payment made by an employee to you or the person who provided the benefit. The employee or recipient's contribution must be made from the employee's after-tax income.

    An employee or recipient's contribution may have to be included in your assessable income (as a general rule, the costs incurred by providing fringe benefits are income tax deductible).

    Excluded fringe benefits

    Benefits that are excluded from the reportable fringe benefits arrangements. They are still taxable benefits.

    Exempt benefits

    Benefits that are not considered to be fringe benefits and, therefore, are not subject to FBT.

    F

    FBT year

    Runs from 1 April to 31 March.

    Fringe benefit

    Benefit provided to an employee (or their associate, such as a family member) in respect of employment. Benefits can be provided by you, your associate or by a third party under an arrangement with you. An employee can be a current, future or former employee.

    G

    Goods and services tax

    Broad-based tax of 10% on the supply of most goods, services and anything else consumed in Australia, and the importation of goods into Australia.

    Grossing up

    Increasing the taxable value of benefits you provide to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax.

    GST (input tax) credit

    You are entitled to a GST input tax credit for the GST included in the price of purchases you make for use in your business. But you are not entitled to a credit to the extent you use the purchases for private purposes or, in many cases, to make input taxed sales. You will need to have a tax invoice to claim a GST credit (except for purchases with a GST-inclusive price of $55 or less, although you should have some documentary evidence to support these claims).

    I

    Income tax exempt charity

    A charity that has been endorsed by the Australian Taxation Office (ATO) as exempt from income tax.

    Individual fringe benefits amount

    Total taxable value of all fringe benefits (other than excluded fringe benefits) provided to a particular employee in an FBT year. It includes benefits provided to an associate of the employee. The individual fringe benefits amount also includes benefits provided by your associate or under an arrangement between you and a third party.

      Last modified: 21 May 2013QC 16123