MY TAX SAVERS
• The use of rateswhere the parking facility is not readily
identifiable as a commercial parking station
• Rates charged for monthly parking on properties purchased for
future development that do not have any car park infrastructure
• Insufficient evidence to support the rates used as the lowest fee
charged for all-day parking by a commercial parking station.
The ATO will also focus on the provision of car fringe benefits
with the aim of ensuring that employers who provide such a benefit
actually declare the benefit on their FBT return (if required to lodge).
Broadly speaking, a car fringe benefit will arise where an employer-
provided vehicle is used or made available for private use for private
travel by either the employee or the employee’s associate (e.g. spouse).
Private use is any use by the employee or their associate that is not
exclusively in the course of earning their assessable income from
whatever source. Note that home-to-work or work-to-home travel is
generally considered private use, and thus may attract FBT.
The second, alternative limb to this test is where the car is ‘available’
for private use it may attract FBT. A car will be taken to be available
for private use by an employee or their associate in either of the
following two circumstances:
(a) It is garaged or kept near an employee’s residence.
Where this is the case, it will be taken to be available for private use
on that day. Thus a car fringe benefit will arise where an employer-
provided vehicle is at the residence of an employee overnight –
irrespective of whether the car is actually used, and irrespective of
whether it was solely used for employment purposes earlier in the day
or the next day.
(b) Car is not at the employer’s business premises
Where this is the case, it will be taken to be available for the
private use of the employee where either of the following apply:
Employee is entitled to apply the car for private use
Employee is not performing employment duties and has custody
or control of the car
An associate of the employee (e.g. spouse) is entitled to use or has
custody or control of the car.
Note also that this is the first year (2019 FBT year) where there has
been a change to the definition of private use for motor vehicles that
are not ‘cars’. To recap, for commercial vehicles that have a carrying
capacity of greater than one tonne, the FBT legislation provides that
where the private use of the vehicle is greater than minor, infrequent
or irregular, the employer will be liable for FBT on that vehicle.
Consequently, for these vehicles (with a carrying capacity exceeding
one tonne) if the private use is not minor, infrequent and irregular, the
private use is subject to FBT – on a Cents Per Kilometre basis, or on
an Operating Cost (see earlier) style of calculation.
Up until recently, there has been very limited guidance from the ATO
about what constitutes “minor, infrequent or irregular”. This along
with the difficulty (for the employer as well as the ATO) of monitoring
after-hours usage has lead to a generous interpretation by employers
and tax professionals alike on what exactly this term means, and
consequently FBT not being paid where it perhaps otherwise should
have been. In response to this, the ATO has released Practical
Guidance Note PCG 2018/3 to assist employers to identify to what
extent they need to determine if an employee’s private use of a vehicle
may attract FBT.
“Private use” is defined in the Practice Guidance “Note as any
diversion in travel that adds no more than two kilometres to the
ordinary length of that trip”. Also that “for journeys undertaken for
a wholly private purpose (other than travel between home and place of
work), the employee does not use the vehicle to travel more than 1,000
kilometres in total, and a return journey that exceeds 200 kilometres”.
Where private usage exceeds these parameters, FBT will generally apply.
The ATO also has its eye on the tax treatment of employee contributions.
To recap, apart from the “otherwise deductible rule”, the other way to
reduce the taxable value of a fringe benefit is for the employee to make
an employee contribution towards the cost of the benefit.
An employee contribution is an amount paid to an employer by an
employee in relation to a fringe benefit. The contribution reduces the
taxable value of a fringe benefit, and must be made by the employee
from their after-tax income. These contributions will normally be
assessable in the hands of the employer. The FBT legislation describes
three types of employee contributions:
1. A recipient’s rent (which reduces the taxable value of
a housing fringe benefit)
2. A recipient’s payment (which reduces the taxable value of a car
fringe benefit) or
3. A recipient’s contribution (which reduces the taxable value
of any of the following types of benefits)
Expense payment fringe benefits
Property fringe benefits
Residual fringe benefits
Board fringe benefits
The ATO is on the look-out for consistent treatment of employee
contributions on the employer’s FBT return, and in their income tax
return. Employee contributions must be reported on the FBT return.
Where you have reported such a contribution, ensure that it is also
reported as assessable income in the business’s tax return. This will
typically be cross-checked by the ATO and could in some cases trigger
an ATO audit or review if there is a discrepancy.
Another issue on the ATO’s radar is the claiming of the FBT rebate.
Employers have been incorrectly claiming the rebate when they are not
eligible for it. Employers that are eligible are limited to the following:
• Registered charities (other than public benevolent instituions or
health promotion charities) that are an institution that are not
established under a Government law and that are endorsed by the
ATO as a tax concession charity
• Certain scientific or public educational institutions
• Certain trade unions and employer associations located in
Australia that are exempt from income tax
• Not-for-profit tax exempt organisations established either for
musical purposes or community service purposes
• Not-for-profit tax exempt organisations established for the
encouragement of either science, animal racing, art, a game or
sport, literature, music
• Not-for-profit tax exempt organisations established for the purpose
of promoting the development of:
Aviation or tourism
Australian information and communications technology resources, or
Australia’s agricultural, pastoral, horticultural, viticultural,
aquacultural, fishing, manufacturing or industrial resources.