Unpaid leave impacts on salary packaging arrangements
A member observed there seems to be limited understanding amongst taxpayers and salary packaging providers regarding the fringe benefits tax (FBT) implications for the different ways novated leases can be dealt with when an employee takes unpaid leave.
The ATO has a limited role when providing non-technical advice and advised novated lease agreements need to be considered on a case-by-case basis. Salary packaging providers are generally responsible for providing advice, not the ATO. This issue is addressed in recently published web guidance on FBT on plug-in hybrid electric vehicles.
Program of work
Car parking
The ATO intends to consult on updates to the draft employers’ guide in early 2025 and will reach out directly to members who have previously nominated to be involved.
Plug-in hybrid electric vehicles – valuing fuel
Consultation on Plug-in hybrid electric vehicles – valuing fuel is now closed. The ATO is progressing public advice and guidance updates, with a draft document expected to be ready early in the new year.
Charging private electric vehicles at work
The ATO thanked members for their feedback on this topic. One member queried whether section 156 of the Fringe Benefits Tax Assessment Act 1986, which relates to the supply of electricity or gas through reticulation system, might apply, which would deem the provision of electricity as a residual benefit, rather than a property benefit. The ATO's preliminary view is that the provision does not apply, due to the electric vehicle disconnecting from the power source at the time the consumption of the electricity occurs. The concepts of supply and application or consumption were discussed in the context of section 156 and the ATO undertook to consider the issue further, based on the discussion.
Plug-in hybrid electric vehicles exemption
Web guidance on FBT on plug-in hybrid electric vehicles content was published in October 2024. The ATO thanked members for their feedback and responded to some of the specific points raised:
What is viewed as a commitment?
What constitutes a financially binding commitment comprises two limbs, the commitment and the provision of a car benefit in respect of the car. Plug-in hybrid electric vehicles (PHEVs) that are owned outright do not satisfy the requirements of a financially binding commitment.
Does the PHEV have to be allocated to a particular employee before 1 April 2025 for the exemption to continue to apply beyond 1 April 2025?
Yes.
PHEV exemption after 31 March 2025: pooled car example in web content
Pooled cars do not satisfy the requirements for grandfathering of the exemption as there is not an ongoing commitment after 31 March 2025 for provision of a car benefit in respect of the car to the employee.
FBT exemptions ending partway through the year and calculation using the operating cost method
This happens infrequently and is not specific to the PHEV issue. For further information, refer to Chapter 7.9 of the Fringe benefits tax - a guide for employers.
Closure of the Fringe Benefits Tax Stakeholder Group
The ATO acknowledged feedback received but confirmed a decision has been made to proceed to close the group.
Members were thanked for their valuable contributions to the group and were advised of the relevant channels to raise future issues, including:
- ATO consultation groups for administration or application issues concerning the FBT law
- Tailored technical assistance, including binding advice for specific client advice, see ATO advice products – rulings.