A lot of things were shaken up in 2020. Working from home was one major lifestyle shift. Welcomed by some, resisted by others but ultimately it blurred the lines when considering the calculation of Fringe Benefits Tax. The ATO has only recently caught up with a list of specific amendments to address the changing nature of taxable benefits that apply in the COVID normal workplace.
What is Fringe Benefits Tax?
Fringe Benefits Tax (FBT) is a tax on relevant non-cash benefits received by employees. FBT currently applies at a rate of 47% to the taxable value of fringe benefits and is paid by the employer.
During the COVID restriction periods, business owners may have provided benefits to employees that they may not have realised were classified as taxable fringe benefits. The ATO has also adjusted certain rules to accommodate these changes to balance out the impact for business owners.
Working from home
If your staff were provided extra equipment to work from home like laptops, or portable printers and other hardware, these will be exempt when used for business purposes. Also, if you supplied stationary or paid for your staff’s personal phone and internet bills, these will likely come under the minor benefits exemption for amounts under $300.
Car parking
If you normally provide staff car parking and this wasn’t available during periods of lockdown then this benefit does not need to count towards fringe benefits provided to employees. This can include public parking stations which were closed or had reduced rates during key periods of 2020 and are normally provided by the employer.
Private use of company cars
If an employee returned a company car and it was not available for their private use, then the normal fringe benefits that apply for this vehicle may be avoided. The car needs to have been returned to the business and not have been accessible by the employee during the relevant period.
Work vehicles garaged at employees’ homes
Normally, FBT applies for work vehicles garaged at your employee’s home. If vehicles were garaged at an employee’s home due to COVID-19 you may be able to avoid an FBT charge based on the type of vehicle, frequency it is driven and how you normally calculate car benefits.
Emergency food & accommodation
You may be exempt from paying FBT on accommodation, food or transport provided to employees in an emergency situation brought about by the Coronavirus pandemic. This could include situations where the employee was unable to travel home to their residence due to border closures or in situations where they were required to self-isolate or quarantine. It also includes transportation expenses to temporary emergency accommodation.
Providing PPE to Employees
You will need to pay FBT on Personal Protection Equipment (PPE) unless your staff are physically required to interact with clients or they were involved in a cleaning role. The minor benefits exemption may also apply for non-customer facing roles up to a maximum of $300.
Healthcare costs
There are some variants in how FBT will apply to health care services provided by you to your employees.
- Flu Vaccines - these are normally exempt from FBT and remain exempt so long as it is available to all employees.
- Coronavirus testing - providing COVID-19 testing is exempt from FBT, again if available to all employees.
- Emergency health care - FBT is exempt if the emergency healthcare is COVID related and conducted at the workplace.
Cancelled Events
Events provided to employees often attract Fringe Benefits Tax. If you incurred non-refundable costs for employee events that were cancelled during COVID then these expenses will not incur FBT as the employee was not able to attend the event.
Fringe Benefits Tax can be a bit of a minefield in regular times. COVID has added an extra layer of complexity this year by adding some new taxable scenarios and removing others. It pays to be aware and get advice leading into tax time.
Saige Accountants are experienced business taxation specialists. We can help you navigate these Fringe Benefits Tax changes and make sure you pay no more than is necessary and that nothing is missed to leave you exposed to further audit. Talk to us about calculating your FBT liability this year.
