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Latest Developments in FBT

As business owners in Australia, staying updated with the latest fringe benefits tax (FBT) developments is crucial to ensuring financial health. Below are the most significant changes to FBT regulations in 2024 that directly impact businesses.

Construction FBT

Car Fringe Benefits: Recent Developments and Exemptions

The Australian Taxation Office (ATO) has clarified car fringe benefits regulations. A car fringe benefit will not arise when an employer provides a car for extensive repairs at a workshop if the car is not used for private purposes and is not held by the employer during the repair period. This exemption does not extend to minor repairs or routine servicing.

Moreover, hiring a car for three months or more and using it privately is deemed a car fringe benefit. However, if the hire arrangement is less than three months, it is classified as a residual fringe benefit, not a car fringe benefit.

FBT Savings and Implications for Logbook Method

Recent ATO guidance confirms that the operating cost method can be used even if a logbook requirement has not been satisfied or maintained. This gives more flexibility in valuing car fringe benefits.

Additionally, if an employee pays out the residual value of a car in a novated or operating lease, and the residual value is less than the market value, there are no FBT implications. However, FBT may be applicable if the employer provides a car to an employee at the end of a hire purchase agreement, and the market value exceeds the employee's contribution.

FBT Trap with Employer-Provided Cars and Signage

If an employer-provided car is wrapped in signage for advertising purposes and garaged at an employee's home every night, it gives rise to a car benefit. The ATO emphasises that private use includes any dual-purpose use with both private and business aspects. So, employers should be cautious when it comes to such arrangements.

FBT-Exemption and Tax Reporting for Electric Vehicles

New FBT exemptions apply to eligible electric vehicles (EVs) provided to current employees or their associates. However, the exemption does not remove the requirement to report exempt electric cars. Employer installation of an electric car charging station at an employee's home is considered a property fringe benefit, and any reimbursement for installation is classified as an expense payment fringe benefit.

FBT Concerns with Panel Vans and Utes

Employers must be cautious when applying FBT exemptions for panel vans and utes since the ATO has extended its motor vehicle data-matching program. Under this program, the ATO will gather information from state and territory motor vehicle registry authorities for vehicles newly registered during the 2023 to 2025 income years with a purchase price exceeding $10,000.

Employee or Contractor Classification for FBT Purposes

The ATO's recent guidelines highlight the importance of the legal rights and obligations of the parties under the contract and distinguish between legal obligations and expectations. Engaging a non-individual "interposed entity" (such as a company or trust) can help reduce the risk of a worker being classified as an employee.

Car Parking Benefits and Commercial Parking Stations

Employers must ensure that a "commercial parking station" within a one-kilometre radius of the car is parked when providing car parking benefits to employees. Small business entities with less than $50 million turnover may be eligible for certain car parking benefits exemptions.

FBT-Deductibility of Employee Travel and Education Costs

It's also crucial to consider FBT exemptions for paid or reimbursed employee travel and education costs. Travel between home and work is generally not deductible for FBT purposes unless it is part of the employee's work activities.

Updated FBT Rates and Thresholds for the 2024 FBT Year

Finally, the 2024 FBT year has updated FBT rates and thresholds. For specific rates and thresholds, please refer to the attachment provided.


2024 FBT rates and thresholds
.pdf
Download PDF • 2.96MB

In conclusion, understanding and incorporating these changes into your financial planning will help navigate the complex world of fringe benefits and manage your financial obligations as a business owner. Stay informed about the latest FBT developments to ensure success in your industry.

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