Recent and proposed law changes

FBT rate changes

The FBT rate has changed for the FBT year ending 31 March 2016 and for subsequent years.

FBT year	FBT rate of tax	Type 1 gross-up rate	Type 2 gross-up rate
Year ending 31 March 2016 and 31 March 2017	49%	2.1463	1.9608
Year ending 31 March 2018	47%	2.0802	1.8868

Not-for-profit capping threshold and FBT rebate rate changes

The not-for-profit capping threshold and FBT rebate rate has changed from the year ending 31 March 2016 and for subsequent years.

FBT year	Public Benevolent Institutions, Health Promotion Charities, Rebatable employers	Public and non-profit hospitals and public ambulance services	FBT Rebate rate
Year ending 31 March 2016 and 31 March 2017	$31,177	$17,667	49%
Year ending 31 March 2018	$30,000	$17,000	47%

Calculating the otherwise deductible rule

The four methods of car expense deduction have been reduced to two. You can only use the ‘cents per kilometre’ or ‘logbook’ methods to reduce the taxable value of a fringe benefit available under the otherwise deductible rule where the costs of operating your employee’s own car are involved.

See also:

• Car expenses

Basic car rate – cents per kilometre basis

You now use a single rate per kilometre for all motor vehicles (regardless of the size of the engine).

You must use the basic car rate determined by the Commissioner of Taxation for the year ending 31 March 2017 where you reimburse an employee on a cents per kilometre basis for certain car expenses.

The FBT return for 2016 could be lodged using the 2014-15 car rates or the single 66 cent rate. However, for the 2017 FBT year onwards, employers must use the single rate that applies for the following income year, per the table below.

FBT year	Cents per kilometre rate
1 April 2016 – 31 March 2017	Rate for the income year 1 July 2016 - 30 June 2017: 66 cents
1 April 2017 - 31 March 2018	Rate for the income year 1 July 2017 - 30 June 2018: To be advised.

See also:

• Car expenses

Salary packaged meal entertainment and entertainment facility leasing benefits

There are changes to salary sacrificed meal entertainment and entertainment facility leasing expense benefits which took effect for the FBT year ending 31 March 2017.

All employers

Rebatable employers, public and non-profit hospitals, public ambulance services, public benevolent institutions and health promotion charities that are eligible for the FBT exemption only

All salary packaged meal entertainment and entertainment facility leasing benefits are reportable and are included on an employee’s payment summary where the reporting exclusion threshold is exceeded. The 50-50 split method and 12 week register method cannot be used for valuing salary packaged meal entertainment or entertainment facility leasing benefits. Meal entertainment and entertainment facility leasing benefits   Provided under a salary packaging arrangement will be disclosed at items 23E, 23K or 23M. Not provided under a salary packaging arrangement will be disclosed at items 23E, 23K, 23M or 23P.

A separate single grossed-up cap of $5,000 applies for salary packaged meal entertainment and entertainment facility leasing benefits. The amount of these benefits that exceed the grossed-up cap of $5,000 are included in calculating whether the value of all benefits an employee receives exceeds the relevant capping thresholds. Meal entertainment and entertainment facility leasing benefits   Provided under a salary packaging arrangement will be disclosed at item 23L. Not provided under a salary packaging arrangement will not be disclosed on the FBT return.

See also:

• Non-profit organisations and FBT
• Entertainment
• Tax-exempt body entertainment fringe benefits

Work-related items exemption

Small business employers that provide their employees with multiple portable electronic devices for the FBT year ending 31 March 2017 onwards are allowed an FBT exemption, even where the items have substantially identical functions.

If multiple portable electronic devices used primarily for work purposes are provided to an employee before 1 April 2016 and the devices have substantially identical functions an exemption is only available for one device.

See also:

• FBT for small business - Work-related portable electronic device exemption

Future change to small business entity threshold

The government has announced an increase to the aggregated turnover threshold for access to most small business tax concessions to $10 million. For FBT purposes, it is proposed that small business entities with an aggregated turnover of less than $10 million will be able to access the small business car parking exemption and extended work-related items exemption from 1 April 2017 (the FBT year ending 31 March 2018).

See also:

• Increase the small business entity turnover threshold