Fringe benefits tax (FBT) initiatives
The Budget contained a number of measures
to close perceived loopholes in the law – many of them
relating to FBT planning opportunities, which are summarised
below.
Eligible work-related items
The provision of some work-related items
(e.g., laptop computers, personal digital assistants and
tools of trade) to employees can be exempt from FBT.
However, this exemption will now only apply where the item
is used primarily for work purposes (if purchased after 13
May 2008).
This FBT exemption will be extended to all work-related
portable electronic devices (including those with multiple
functions) acquired after this date.
However, employees will no longer be able to depreciate
laptops or other FBT exempt work related items where they
have been reimbursed by the employer (i.e., where the item
was acquired through salary sacrifice).
Meal cards
A planning opportunity has been available
for employees to salary sacrifice their meal expenses, with
no FBT, where
those meals were eaten on the employer’s business
premises (Often through the provision of a ‘meal
card’,
accepted by retailers near the employer’s premises).
After 13 May 2008, this FBT exemption will no longer apply
to such meals. Existing balances on meal cards will remain
eligible for the exemption as long as they are used by 31
March 2009.
This measure will not affect subsidised canteens that are
provided to all staff and that are not part of a salary sacrifice
arrangement.
Jointly held assets
For new arrangements entered into after
13 May 2008, the FBT rules will be amended to ensure the
full value of a benefit provided jointly to
an employee and their associate (e.g., reimbursement
of a jointly incurred rental property expense) is subject
to
FBT.
Employees who have already entered into salary sacrifice
arrangements will be able to utilise existing arrangements
until 31 March 2009.
Medicare levy surcharge changes
The Government has announced that the
thresholds at which the Medicare levy surcharge is imposed
will be increased (for the first time since 1997).
From 1 July 2008, the Medicare levy surcharge thresholds
will be increased for singles (from $50,000 to $100,000)
and for those who are members of a family (from $100,000
to $150,000).
However, in making decisions about whether to retain private
health insurance, taxpayers should remember that:
-
the Government’s 30% private health insurance rebate
(up to 40% for older individuals) will remain; and
-
the Government’s Lifetime Health Cover (LHC) initiative,
which encourages individuals to take out and keep private
health insurance while they are young, remains unchanged.
- To avoid paying extra under the LHC, individuals
generally need to take out Hospital cover by the 1st of
July following
their 31st birthday. For each year they delay, they will
pay 2% more for their
premium,
up to a maximum of 70%.
Jointly held assets
For new arrangements entered into after
13 May 2008, the FBT rules will be amended to ensure the
full value of a benefit provided jointly to
an employee and their associate (e.g., Reimbursement
of a jointly incurred rental property expense) is subject
to
FBT.
Employees who have already entered into salary sacrifice
arrangements will be able to utilise existing arrangements
until 31 March 2009.
Super co-contribution reminder
Super fund members who are eligible
to receive the super co-contribution need to make personal
contributions before 30 June 2008.
Note that eligibility for the super co-contribution was
extended from 1 July 2007 to self-employed people who make
after-tax contributions.
Editor: To be eligible to receive the super co-contribution,
a taxpayer’s ‘total income’ (Assessable
income plus reportable fringe benefits) must be less than
$58,980, and at least 10% of that total income
must be from eligible employment (e.g., salary and wages)
or business activities.
Amounts mistakenly paid to employees
The ATO has set out the income tax and
FBT consequences of an employer mistakenly paying amounts
as salary or wages to employees to which
they are not beneficially entitled, but which they are
obliged to repay:
- These amounts (including income support payments
or worker’s compensation amounts) will not be taxable
as ‘ordinary income’ of
the taxpayer;
-
Where an employer recognises they mistakenly paid such an
amount to their employee, and afterwards allows the employee
time to repay the amount, there is a ‘loan benefit’ for
FBT purposes;
-
If the employer subsequently waives the employee’s
obligation to repay the mistakenly paid amount, this constitutes
a ‘debt waiver benefit’ for FBT purposes.
The provision of a fringe benefit to the employee may mean
that FBT will apply unless the benefit is exempt, for example,
as a ‘minor benefit’.
ATO data matching programs
The ATO will be undertaking a number
of data matching programs to identify taxpayers who may not
be meeting their taxation (including CGT, income
tax and GST) obligations, and will acquire:
- identity and transaction details relating to
securities held in all ASX listed entities by approximately
2.8 million individuals;
- owner builder licence registration information
from Victorian and NSW authorities, relating to approximately
75,000 entities in the building and construction industry;
- details of approximately 600,000 individuals
or entities that have purchased or acquired a motor vehicle
valued
at $57,009 or higher from the road and transport authorities
in each of the States and Territories.
FBT car parking threshold
The car parking threshold for the FBT year commencing on
1 April 2008 is $7.07.
CGT improvement threshold. For the 2008/09 income year, the improvement threshold,
which is used for working out when a capital improvement
to a pre-CGT asset is a separate asset, and for capital improvements
to CGT assets.
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