FRINGE BENEFITS TAX: RATES, THRESHOLDS AND ATO FOCUS FOR 2019-2020

The ATO has flagged the following FBT issues that are on its radar this year:

•       for motor vehicle fringe benefits:

-         failing to report such benefits;

-         incorrectly applying exemptions; and

-         incorrectly claiming reductions;

•       for employee contributions, mismatches between the amounts reported on an FBT return and the income amounts on the employer’s tax return;

•       for entertainment benefits:

-         claiming a deduction but not correctly reporting the expenses as a fringe benefit; and

-         incorrectly classifying entertainment expenses as sponsorship or advertising;

•       for car parking fringe benefits:

-         incorrectly calculating by significantly discounting market valuations;

-         incorrectly calculating by using non-commercial parking rates; and

-         not supporting claims with adequate evidence;

•       not reporting fringe benefits on business assets that are provided for the personal enjoyment of employees or associates; and

•       not lodging FBT returns (or lodging them late) to delay or avoid paying tax.

The ATO’s annual rulings regarding FBT rates, thresholds and other amounts have also been released for the 2019–2020 FBT year (1 April 2019 to 31 March 2020).

Cents-per-kilometre rate: vehicles other than cars

Taxation Determination TD 2019/3 sets out the cents-per-kilometre rates for the 2019–2020 FBT year for calculating the taxable value of a fringe benefit arising from private use of a motor vehicle other than a car. These are:

•       55 cents per kilometre for vehicles with engine capacity of up to 2,500cc;

•       66 cents per kilometre for vehicles with engine capacity of over 2,500cc; and

•       16 cents per kilometre for motorcycles.

FBT record-keeping exemption threshold

Taxation Determination TD 2019/4 sets the FBT record-keeping exemption threshold for the 2019–2020 FBT year at $8,714. This is an increase from the threshold of $8,552 for the 2018–2019 FBT year.

Indexation factors for valuing non-remote housing

Taxation Determination TD 2019/5 sets out the indexation factors for the 2019–2020 FBT year for valuing non-remote housing. These are:

•       1.020 for New South Wales;

•       1.019 for Victoria;

•       0.997 for Queensland;

•       1.008 for South Australia;

•       0.937 for Western Australia;

•       1.043 for Tasmania;

•       0.948 for the Northern Territory; and

•       1.028 for the ACT.

Benchmark interest rate

Taxation Determination TD 2019/6 sets the benchmark interest rate for the 2019–2020 FBT year at 5.37% per annum (this is an increase from the rate of 5.20% for the 2018–2019 FBT year). The benchmark interest rate is relevant to calculating the taxable value of car fringe benefits, for employers using the operating cost method, and loan fringe benefits.

Living-away-from-home allowance: food and drink amounts

Taxation Determination TD 2019/7 sets out the weekly amounts the ATO treats as reasonable for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the 2019–2020 FBT year. These amounts take into account movement in the consumer price index (CPI) and the 2015–2016 Household Expenditure Survey.

Separate reasonable amounts apply for locations within Australia and for overseas locations. For Australian locations, the reasonable weekly amounts for the 2019–2020 FBT year are:

•       $269 for one adult;

•       $404 for two adults;

•       $539 for three adults;

•       $337 for one adult and one child;

•       $472 for two adults and one child;

•       $540 for two adults and two children;

•       $608 for two adults and three children;

•       $607 for three adults and one child;

•       $675 for three adults and two children; and

•       $674 for four adults.

For larger family groupings, add $135 for each additional adult and $68 for each additional child. An “adult” for this purpose is an individual aged 12 years or more as at 31 March 2019.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.