FBT For UNSW
Anne Harvey – Group Tax Manager,
Corporate Finance
Eric McCallum, Lucy Lowe - Tax Team
Agenda
•
•
•
•
•
•
•
•
•
•
•
•
•
•
What is FBT - Facts
Taxable Values
Calculating FBT
Exemptions and Reductions
Types of Benefits – Examples
Entertainment
Travel
Travelling v Living Away From Home
Visiting Academics
FBT Accounts
Common Errors
Reportable Fringe Benefits
Finance Website
Questions
Fringe Benefits Tax - Facts
•
•
•
•
•
•
•
•
FBT year 1 April to 31 March
Tax Rate 47% (49% from 1 April 2015)
FBT calculated on Grossed Up Taxable Value
FBT paid by employer – UNSW
Includes benefits under a salary sacrifice arrangement
Reportable Fringe Benefit included on Payment Summary in June, if over
$2000 in employee benefits
FBT is tax on benefits (right, privilege, service or facility)
 provided to employees & associates (relative, partner/ spouse, child)
 by an employer, associate of employer or under an arrangement with a
third party
 in respect of employment – reward for service
“Employee” includes current, former and future employees
If pay Salary  PAYG deduction  Employee pays tax
If provide fringe benefit  no PAYG deduction  Employer pays tax
FBT Calculated on Taxable Value
What
Value
r Benefits is
TaxTaxable
- Facts
•
•
•
•
Determined by the rules applying to each category of fringe benefit
Generally the cost of the benefit
Some benefits concessional tax, e.g. Motor Vehicles
Some reductions and exemptions provided in legislation
GST Impact
• Taxable Value based on GST inclusive amount
• FBT payable depends on whether entitlement to ITC credit
• Can claim Input Tax Credit for GST paid
Important correct GST codes are used and GST amount is correct.
FBT Calculation
ring Benefits Tax - Facts
Type 1
Entitlement to ITC
Gross Up rate
2.0802
Taxable Value – incl GST
* Gross Up rate
Grossed up TV
FBT rate
47%
FBT cost
$977.69
$1000.00
2.0802
$2080.20
Type 2
No entitlement to ITC
Gross Up rate 1.8868
Taxable Value - no GST
* Gross Up rate
Grossed up TV
FBT rate
47%
FBT cost
$886.80
$1000.00
1.8868
$1886.80
ITC to claim $1000/11 = $90.91
No ITC to claim
Total Cost $1000-90.91+977.69+102.83=$1989.61
Total Cost $1000+886.80+102.83=$1989.63
PRT = $1000 * 1.8868 * 5.45% (NSW PRT rate) = $102.83
Exemptions and Reductions in
Legislation
Exemptions
• Work related item - portable
electronic device – limit 1 per
FBT year
• Protective clothing
• Minor Benefit
< $300 – Infrequent and Irregular
• Relocation – transport, consultant
• Employment Interview or
Selection
• Airport lounge
• Professional subscriptions
• Child care or gym on business
premises
• LSL awards - $1000/15 years
+$100/ additional year
• Car parking
• Shared accommodation for family
– no additional cost
Reductions
• Otherwise deductible with
declaration - reduced by % of
business use
• Relocation in employee’s car –
cents/km, with declaration
• Full time education of children of
Overseas employees (HR)
• Holiday transport overseas
employee – 50% concession.
Limit 1 trip/year
• Temporary accommodation on
relocation – time limits and
searching for accommodation
Examples of Benefits Incurring FBT
Current Policy allows for these
Benefits
Be aware of FBT
What can the Business Unit Control
Permanent Residency – application,
police & medical checks, lawyers fees
where already in Australia
 Only exempt if to enter Australia on
relocation
Gifts, awards and prizes - $300 or more
 Try to structure to under $300, e.g. 2 @ $250
instead of 1 @ $500
Renewal of 457 Visa where already in
Australia
 Only exempt if to enter Australia
Reimburse deferred HECS/HELP fees – this
reimbursement of loan for employee not course fee
 Don’t reimburse if fees deferred
VC Child care support
Furniture purchase in lieu of relocation
transport/ relocation allowance
 Transport actual goods, not buy new
household goods
Write off Advance - Debt waiver
 Ensure advance acquitted promptly
Accommodation and meals – provided
to tutors/employees – TKC/URC
Medical Insurance – inpatriates and
expatriates
Outstanding Advance not acquitted within 6 months –
Loan benefit with interest calculated
 Ensure advance acquitted promptly
Entertainment – tax exempt body
Home phone/ internet – private use %.
 Only provide where large business use. Need
declaration from employee
Recreational entertainment
 Bowling
 Cruises
 Movie tickets
Dual purpose travel – business and private. FBT on
50% - private activity
 Identify upfront with employee paying 50% of
airfare
Salary packaged Motor Vehicles Employee pays FBT
 UNSW provided MV - limit personal
use
Travel for family (excludes relocation)
 SSP – Limit to what Policy allows
Travel Diaries
 Run Travel Tax Exception Report. Ensure obtained
Entertainment v Sustenance
• Social – entertainment
• How elaborate
• Sit down meal – FBT
• With alcohol - FBT
• Finger food –
sustenance
• Coffee sustenance
ring Benefits Tax
FBT - Facts
• Complete working day
in comfort –
Sustenance
• CPD seminar sustenance
• Overtime –
Sustenance
• Employee travelling –
Sustenance
• After work - FBT
Why
What
When
Where
• On premises – less
likely entertainment
• Off premises – more
likely entertainment
Sustenance (No FBT)
Entertainment (FBT)
Sustenance
Sustenance
Moderate
alcohol
Entertainment
Entertainment
Coffees
Morning Teas
Workshop/
Seminar lunch
(Incidental to
seminar)
Restaurant
lunches/dinners
Christmas party
Social event
Overtime meal
Working lunch
<$15-$20 head
Refreshments
after CPD
seminar
Team bonding
recreational
activity
Farewell or
Retirement
Dinners
Finger Food
Sandwiches Fruit
Employee
Travelling
Some attendees
go to Dinner after
seminar
Order in food for
entertainment on
premises
Seminar nibbles
snacks
Conference
Dinners (part of
conference)
Team lunch at
Restaurant
Promote business
off campus –
open to public
Sustenance – no
FBT(6611)
ring
Benefits Tax
Facts
• Morning
and- afternoon
tea for employees
• Birthday cake – morning tea for
employees
• Light lunches, sandwiches, finger food,
salad, juice, etc for employees
• Light breakfast at training seminar –
incidental to seminar
• Finger food and light refreshments (with
moderate alcohol) immediately after
training or CPD seminar – incidental to
seminar
• Meal at seminar that goes for over 4
hours
• Meal (with alcohol) while travelling on
business – employee (7010,7110)
• Tea / coffee – employee
• Overtime meal in office
• Conference dinner – part of conference
Entertainment – FBT
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Social function, farewells
Party, Christmas party
Restaurant meals
Business lunch & drinks
Celebrations, Dinners
Spouse meal of employee travelling on
business
Non travelling employee (when dines
with travelling employee)
Morning, afternoon tea, light lunches –
associates
Leisure or amusement activities
Sporting activities, golf days
Gym membership, sporting club
memberships
Holiday
Theatre/movie ticket
Cruises
Team bonding without structured training
Travel Benefits
Business Purpose – no FBT
Dual Purpose - FBT
•
•
•
•
•
•
•
•
•
•
•
Predominantly business undertaken
Considered Incidental to business – extra
day to acclimatise/ recovery day
Weekends during business period, e.g. 2
week business trip with weekend in middle
Day to prepare/ wrap up
Make Flight connections
Due to flight availability/ unavoidable delays
1 day Stopover en route – no extra cost
Day between business meetings
•
•
•
•
Travel to conference then take holiday
Holiday at same or different location
Book Annual Leave days in myUNSW and
not incidental to trip
Family accompanies
Travel Allowance/accommodation only for
business days
Frequency of trips
No restrictions on private travel
 Private days more than 40% of total days
Options
 Flight cost split 50/50 between business
and private  FBT on 50% private
 Employee pays 50% of airfare directly to
Travel Agent  No benefit  No FBT
Travel – What Days are Business
and Private
Business Days
Private Days
At least 2-3 hours of business in day
Any day not considered business
Unavoidable delays between
business activities
Days of booked recreation leave
Travel days to and from the business
location
Weekends/public holidays within
private days
Travel recovery days at start or end
of trip
Weekends/public holidays after
business finished
Weekends or public holidays within
business activities
Travel days to or from a holiday
location, e.g. travel to another
location for holiday after business
Working from office or hotel where
majority of day spent working
University shut down period
Extended public holiday periods e.g.
Easter, where employee could return
home as business has finished
Travel Diaries
•
•
•
•
•
•
•
•
•
Travel Diary - TR5 form
6 or more nights away from home or trip not exclusively business
For Employees only, not required for students, visitors
Show Business activities undertaken, location
Show dates of activities, commencement time, duration
Attach to Serko booking under UNSW tab
If outside Serko, attach to Expense Claim, Travel Acquittal, Credit Card
reconciliations, retain in School
If No Travel Diary, FBT applies to all costs for trip.
No Travel Diary - Reminder emails, follow up in Serko
Travel > 5
nights
Complete
Travel
Diary
Attach to
Serko
booking
Travelling v LAFH
Travelling
LAFH
Duration
Short periods (ATO - 21 days)
Commercial style
accommodation –hotel, motel
Unaccompanied by family
Move from location to location
Maintain home at previous
location
Family
Nature of
Accommodation
Frequency of
trips
Longer Term
Set up new home
Lease Longer term
Accommodation
Accompanied by Family
Stay in one place
Move around/
Fixed place
ATO Travel
Allowances
Within Income
Tax
legislation
Difference Tax
Treatment
Within FBT
legislation
Living Allowance
Pay Living Allowance  FBT legislation on LAFHA
• Meet eligibility requirements
• Meet Conditions
Does an Exemption apply
• Requirements – Declarations, substantiations
• Limits – Time and Dollar
No Exemption – FBT applies
• FBT is Additional cost if pay LA
• Alternatively Pay as Taxable Allowance - PAYG deductions
Living Allowance – Eligibility
Requirements
from 8 May 2012
•
Required by employer/future employer to live away from normal residence in Australia
– Must be a home in Australia
•
Employee or spouse have an ownership interest in normal residence in Australia.
– Incur ongoing cost of maintaining residence, e.g. mortgage, rates, rental payments
•
Maintain a home in Australia (at which they usually reside) which is available for their immediate
use and enjoyment at all times while LAFH.
– Residence cannot be rented out or sublet while away
– Residence can be left vacant or family continue to live there
– Adult children living at home with parents specifically denied LAFH
•
Expect to return to normal residence upon completion of job
•
Eligibility based on exemption in FBT legislation
Living Allowance - Conditions
•
•
•
•
LAFH concessions restricted to maximum period of 12 months
– 12 months per location, per employee
– If work location changes, 12 month period starts again, but distance between old and new
cannot be commutable
– 12 month period can be paused if employee resumes living at usual residence, e.g. annual
leave
Employee to provide a LAFH declaration – each FBT year
Substantiate amount spent on accommodation
– Exempt from FBT actual expenditure incurred and substantiated, e.g. rental receipts, bank
statements, credit card statements, statement from landlord. Excludes mortgage repayments
– Any allowance not spent on accommodation subject to FBT
Food and Drink can provide an allowance
– If not exceed ATO’s reasonable limits, no substantiation required
– If exceeds ATO’s reasonable limit full amount must be substantiated
ATO sets reasonable F&D rates each FBT year. 1 April – 31 March. Rates based on location and
family size.
Visiting Academics
Characteristics
Benefits Provided
• Currently employed by academic
institution either interstate or
overseas
• On Sabbatical leave and
remunerated by existing employer
• Invited by UNSW to undertake
array of activities and to observe
and collaborate
• Visa limits on number of days to
undertake academic or research
activities (if from outside
Australia)
• Reimburse actual cost incurred –
airfares, accommodation, meals,
incidentals
• Direct payment of expense airfares, accommodation, meals
• Provide accommodation – stay in
UNSW accommodation
• Pay allowance for living costs –
accommodation, meals, other
costs. Based on Travel Allowance
rates and minimum salary band
• Must be reasonable: 2014/2015
Accommodation $185 per day
Meals $102.55, Inc’al $18.70/day
Visiting Academics
Assessment
• Duration of Visit
• Visa conditions
• Payment for Living
Costs
• Within Reasonable
Travel Allowance rates
• Double Tax Agreement
with Visitors home
country
• Supporting
documentation
Tax Exemption
No Tax Exemption
• Pay in AP
• Pay in HR
• Traveller ≤ 90 days
• DTA - Professor/
Teacher Article ≤ 2
years
• DTA - Independent
Contractor Article –
varying Time and
Monetary limit
• Visitor assessed on
payment in home
country
• Visitor obtains TFN
• PAYG withholding
depending on tax
residency and tax free
threshold
Visiting Academics – DTA exemption
countries
Professor Teacher Clause
Independent Contractor
Maximum 2 years
No time limit
< 183 days
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Argentina
Belgium
China
Fiji
Germany
Hungary
India
Indonesia
Ireland
•
•
•
•
•
•
•
•
•
Italy
Korea
Malaysia
Netherlands
Philippines
Poland
Sweden
Thailand
Turkey
Austria
Canada
Denmark
Netherlands
Romania
Russia
Spain
Switzerland
Taipei
Vietnam
Chile
Czech Republic
Malta (Max $12500)
Mexico
Slovakia
South Africa
Sri Lanka
United States of America
<90 days, Max $8000
•
Kiribati
•
PNG
Visiting Academics
Visits Up to 90 Days – Pay in AP
From Country with Professor/Teacher Article in DTA
Visit up to 2 years. 18 Countries – Pay in AP
From Country with Independent Contractor Article in
DTA
Duration varies by country – No time limit, <90 or 183 days.
Some have monetary limits – Pay in AP
Other Countries, no DTA. DTA but Outside time and
monetary limits. – Pay in HR
FBT Applicable Accounts in
General Ledger
GL Account
Description
FBT Accrual A/c
6457
6459
6501
6613
6619
6623
6624
6626
6630
Entertainment
Entertainment – Recreational
Uniforms FBT Payable
Staff Exp Membership Fees
Staff Gifts & Awards $300+
Staff Exp –Recognition Awards
Staff Exp - Education
Staff Exp – Childcare
Staff Expenses FBT
6662
6687
6663
6664
6687
6692
6682
6687
If expenses charged to the GL account, FBT will be accrued at month end
Accrued FBT v Actual FBT
Throughout Year
Expense – FBT account
FBT accrual
FBT Return
Actual FBT cost
V
Accrued FBT cost
Adjustment to FBT charge
Overcharged - Credit
Undercharged - Debit
Common FBT Mistakes
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Benefits not charged to FBT applicable account
Gifts ≥ $300 per person, allocated to account < $300
Teaching awards treat as exempt, coded to non FBT account  benefit to employee
Not include name of recipient of benefit (not required for meal entertainment) “Who was the
purchase for”
Reimburse deferred course fees – not payment for work course; payment of employee’s debt
Reimburse for additional 10% when no GST charged
Renew work visa and treat as exempt. ATO view: to continue to live and work in Australia
Permanent residency application when already in Australia and treat as exempt  to live and
work in Australia
SSP airfares and split based on number of employees and family. Child airfares cheaper, may
only pay contribution to spouse airfare not full amount.
Coffees/Morning teas charged to entertainment account
Conference/workshop/seminar meals/overtime meal or while employee travelling charged to
entertainment account
Description not helpful to explain what expense for
Family accommodation in same room as employee, no extra cost – can exempt
Meals while employee travelling coded to Entertainment account
Reportable Fringe Benefits
Employee Receives More Than $2000 in RFB in year include
Grossed Up value of benefits on Payment Summary at June
Reportable Benefits









Motor Vehicles
LAFHA
Expense Benefit
Property Benefit
Residual Benefit
Housing
Loans
Debt waiver
Recreational entertainment
Non Reportable
Benefits



Food & Drink/Meal Entertainment
Hire/Lease entertainment facility (i.e.
corporate use/ exclusive use facility)
Car Parking (UNSW exempt car parking)
Reportable Fringe Benefit –
Payment Summary
Employee
Employer
RFB Grossed Up using lower gross up
rate 1.8868
Example:
4 family airfares @ $1500 = $6000
TV (no GST)
$6000
FBT $6000*1.8868*47% = $5321
RFB $6000*1.8868 $11321
•
Not included in assessable income
•
Included for rebate and surcharge
calculations
Medicare levy surcharge
Super co-contributions
Child support obligations
HELP debt repayments
Dependent tax offsets
Income tested government benefits
•
•
•
•
•
•
Finance website - Taxation
Finance website - Taxation
Finance website - Taxation
Further Information and Questions
•
Further Information
– Finance website - Taxation
•
Questions