Read about recent events and changes affecting fringe benefits tax (FBT).
Note: Announced measures that are not yet law are subject to consideration by the incoming government. In these circumstances, you need to self-assess based on current law. If you choose to anticipate new law in line with the announcement and it is not enacted, you may need to seek an amendment. See more about administrative treatment of retrospective legislation.
Proposed and recent law changes
Proposed law changes include:
Recent law changes include:
- COVID-19 testing for work-related purposes and the otherwise deductible rule
- FBT retraining and reskilling exemption
- Access to certain FBT small business concessions
Proposed law changes
Changes to FBT record keeping
The government has announced it will provide the Commissioner of Taxation with the power to allow employers to rely on alternative records, such as existing corporate records where adequate, to finalise their FBT returns. This would be an alternative to employee declarations and other prescribed records.
If enacted, the changes will take effect from the start of the first FBT year (1 April) after the date of royal assent of the legislation. As it has not yet been enacted, the usual FBT record keeping obligations apply for the FBT year ending 31 March 2022.
Worker entitlement contributions
Under changes proposed by the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019, the exemption for worker entitlement contributions will only be available to an employer if the contribution is made to a fund either:
- registered under the Fair Work (Registered Organisations) Act 2009
- established by or under, and operating under, a law of the Commonwealth, a state or territory, for the purposes of ensuring long service leave is paid.
Other existing conditions for exemption are unaltered by this measure.
The proposed changes will apply from a date set by proclamation or six months and a day after the changes receive royal assent. Employers will need to confirm that any worker entitlement fund they make a contribution to is registered at the time of commencement, under either the:
- Fair Work (Registered Organisations) Act 2009
- register maintained by the Registered Organisations Commissioner as a transitioning approved or non-approved fund.
Funds currently endorsed as an ‘approved worker entitlement fund’ for fringe benefits tax may be ‘transitioning funds’ for up to 12 months after commencement while they seek registration as a worker entitlement fund.
At the time of publishing, this change had not yet become law.
Worker entitlement funds
There will be changes for funds that are currently endorsed, or seeking endorsement, as a worker entitlement fund for FBT purposes should the proposed amendments become law. They will be required to register under the Fair Work (Registered Organisations) Act 2009 if they wish to continue to operate as a worker entitlement fund. Registration will involve considerations and obligations unrelated to FBT.
Recent law changes
COVID-19 testing for work-related purposes and the otherwise deductible rule
From 1 July 2021, individuals who buy or pay for a COVID-19 test for work-related purposes – such as to work out if they should attend or remain at work – can claim an income tax deduction for this expense.
If an employer buys, pays for or reimburses these expenses instead of the employee incurring the expense, the otherwise deductible rule may apply. This will reduce the taxable value of the expense payment, property or residual fringe benefit.
For information about testing to attend the workplace and the otherwise deductible rule, see FBT, COVID-19 tests and the otherwise deductible rule.
FBT retraining and reskilling exemption
Under changes to the FBT laws, employers who provide a benefit in respect of training or education to employees who are redundant – or are soon to be made redundant – may now be exempt from FBT.
The exemption can be applied to retraining and reskilling benefits provided on or after 2 October 2020.
Retraining and reskilling benefits that are exempt from FBT are not included in your FBT return, or in your employee's reportable fringe benefits amount.
The FBT guide for employers further explains exempt benefits (chapter 20).
Access to certain FBT small business concessions
Under changes to the FBT and income tax laws, businesses with an aggregated turnover of $10 million or more and less than $50 million can access certain existing FBT small business concessions.
Eligible businesses can access:
- a fringe benefits tax exemption in relation to small business car parking
- a fringe benefits tax exemption in relation to the provision of multiple work-related portable electronic devices.
The changes to eligibility for the concessions apply in relation to benefits provided to employees from 1 April 2021 onwards.
The FBT guide for employers further explains car parking fringe benefits (chapter 16.1) and portable electronic device exemptions (chapter 20.8).
Administrative changes
Deferral of due date for balancing payment for FBT
The due date for the balancing payment for fringe benefits tax (FBT) for employers using tax practitioners who lodge FBT returns electronically has been deferred from 28 May to 25 June.
The due date of the balancing payment is now aligned to the due date of the FBT return lodgment date of 25 June for this class of taxpayers.
This deferral applies from the 2021 FBT year onwards. Note that the 25 June 2022 falls on a weekend, so the due date for the 2022 year will be the 27th June 2022 (the next business day).
Recent public advice and guidance
Coronavirus (COVID-19) vaccination incentives and rewards
Where incentives and rewards were provided to employees who received their COVID-19 vaccinations, employers may have FBT and other tax and super obligations., We've published a fact sheet on the legal database to help employers understand these obligations.
Coronavirus (COVID-19) impacts
Businesses may have been impacted by COVID-19 and employers may provide their employees with benefits as a result. This may affect your FBT obligations. This includes allowing your employees to garage a work vehicle at home and paying for items that allow your employees to work from home.
To help you deal with FBT obligations in the context of COVID-19 we have information on our website, as well as fact sheets on our legal database regarding car fringe benefits and working from home benefits.
Car parking fringe benefits
Taxation Ruling 2021/2 Fringe benefits tax: car parking benefits which was published on 16 June 2021.
This ruling finalises Draft Taxation Ruling TR 2019/D5. The ruling sets out when the provision of car parking is a 'car parking benefit' for the purposes of the fringe benefits tax legislation.
This ruling applies before and after its date of issue. However, to the extent that this ruling conflicts with views in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (withdrawn 13 November 2019), it will apply to car parking benefits provided on or after 1 April 2022.
Deductibility of employee travel expenses
Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employee's transport expenses? was published on 17 February 2021. This ruling finalises Draft Taxation Ruling TR 2019/D7, and provides guidance on when an employee can deduct transport expenses under section 8-1 of the Income Tax Assessment Act 1997.
This ruling explains that generally, transport expenses for travel between home and a regular place of work do not have the required connection to employment income and are not deductible. In contrast, transport expenses incurred when travelling between work locations are generally deductible provided neither location is the employee's home. The ruling also explains a number of special cases or exceptions to these general rules.
This ruling applies in determining whether such expenses, if paid by the employer as a fringe benefit, would be 'otherwise deductible' if they had been incurred by the employee.
Travel-related food and drink expenses, travel allowances and living-away-from-home allowance (LAFHA)
Taxation ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances and living-away-from-home allowances was published on 11 August 2021. It finalises TR 2021/D1 and explains:
- when an employee can deduct travel-related accommodation and food and drink expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)
- the fringe benefits tax implications, including the application of the ‘otherwise deductible rule’
- the criteria for determining where an allowance is a travel allowance (as defined in subsection 900-30(3) of the ITAA 1997) or a living-away-from-home allowance benefit (under section 30 of the Fringe Benefits Tax Assessment Act 1986) and the differences between them.
Practical Compliance Guideline PCG 2021/3 Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location – ATO compliance approach was published on 11 August 2021. It outlines the ATO’s compliance approach to determining if employees in certain circumstances are travelling on work or living at a location away from their normal residence. It should be read in conjunction with Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances and living-away-from-home allowances.
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