FINANCIAL MANAGEMENT PRACTICE MANUAL
GRIFFITH UNIVERSITY
Topic
FRINGE BENEFITS TAX
Procedure
Category
Taxation
Updated
12.02
08/2006
RELATED POLICIES, PROCEDURES AND FORMS
Policies
Procedures
Forms
Fringe Benefits Tax
FBT Entertainment Checklist and
Expense Form
FRINGE BENENFITS TAX
1
INTRODUCTION
The University is required to pay Fringe Benefits Tax (FBT) in accordance with the legislative
requirements of the Fringe Benefits Tax Assessment Act 1986 (FBT Act).
Areas of the University responsible for the incurring of expenditure which becomes a taxable benefit in
terms of the FBT Act are charged, unless exempted, with the resultant FBT expense payable by the
University.
In respect of a Taxable Benefit being provided to an employee under a Salary Sacrifice Arrangement,
the FBT incurred by the University is recovered from the employee as part of the arrangement
A detailed statement of the University’s position on FBT is contained in the Fringe Benefits Tax section
of the Finance and Business Services website.
Definitions:
“Benefits” are defined broadly and includes any right, privilege, service or facility but
excludes payments of salary or wages, eligible termination payments or contributions to
complying superannuation funds.
“Employees” are defined under the Act as current, future or former employees.
Associates are also caught and these would include relatives of employees and
employees of related entities.
“Fringe Benefits’’ are benefits provided by the University (or associate of the
University), in respect of employment, to an employee (or associate of the employee). A
fringe benefit can be viewed as a type of "payment" to or for an employee but is different
to salary or wages.
2
STATEMENT OF PRACTICE
Fringe Benefits Tax is:
•
assessed annually with the year of tax spanning from 1 April to 31 March;
•
administered on the basis of self-assessment. Where a FBT liability exists, the employer must
lodge an annual return together with the tax payable by 21 May.
FBT is payable by the University on the taxable value of all non-exempted fringe benefits provided.
The taxable value may be reduced where the employee contributes to the cost of the benefit. A
reduction in the taxable value may also be available where the employee would have obtained a tax
deduction had the expense been incurred privately. This is known as the "otherwise deductible" rule.
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FINANCIAL MANAGEMENT PRACTICE MANUAL
GRIFFITH UNIVERSITY
FBT effectively doubles the cost of any fringe benefits that are provided to staff. The table below
depicts the additional cost to the University when providing fringe benefits. The total cost of the
benefit should always be considered before providing the benefit.
Benefit
No GST input tax credit is
available
GST input tax credit is
available
Type of Benefit
Type 2
Type 1
Fringe Benefit
$100
$110 (NB: $100 net cost after
credit)
$87 (100 x 1.8692 x 0.465)
$106 (110 x 2.0647 x 0.465)
$187
$206 (after recovery of GST)
FBT
Total Cost
2.1
TAXABLE BENEFITS
The following benefits are included in the calculation of FBT:
•
Entertainment
•
Car
•
Accommodation
•
Living Away from Home Allowance (LAFHA)
•
In House Property (Meal)
•
Expense Payment
•
Loans
•
Salary Packaging
Fringe benefits received by an employee exceeding $1,000 ($2,000 from 1st April 2007) are reported
on the Payment Summary for that employee.
2.2
EXCLUDED BENEFITS
The following benefits are excluded (this list is not exhaustive):
•
notebook computer, laptop computer or similar portable computer subject to use being primarily
for business purposes (this exemption is limited to one per year per employee);
•
protective clothing - e.g. overalls, laboratory coats;
•
briefcase, calculator, electronic diary subject to use being primarily for business purposes;
•
computer software if same is used in employment;
•
an employee's subscription to a trade or professional journal;
•
costs of removal and storage or household effects of employees who are required by the
University to change job locations; and
•
travel and accommodation related to employee interviews or selection tests.
•
fees for an airport lounge membership eg Qantas Club membership
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FINANCIAL MANAGEMENT PRACTICE MANUAL
GRIFFITH UNIVERSITY
•
newspapers and periodicals provided to employees for work related use
•
recreational or child care facilities if provided on the University’s premises
•
standard car parking at the University
•
minor benefits eg. small gifts given to employees as a reward for a special achievement
3
RESPONSIBILITIES
3.1
DEPARTMENTS/ELEMENTS
A statutory responsibility exists for ensuring that proper accounts and records are kept of University
transactions. Departments/Elements are responsible for identifying fringe benefits as they are paid
and gathering the information required to determine what portion of entertainment expenditure is
subject to FBT.
Adequate supporting documentation must accompany all transactions processed as entertainment.
To assist with this documentation, payments relating to food and drink expenditure are to be
accompanied by a FBT Entertainment Checklist and Expense Form. The form has been designed to
satisfy the substantiation requirements of the ATO and simultaneously, assist in the calculation of the
tax payable.
Departments/Elements must also obtain declarations with respect to benefits being paid in accordance
with the “Otherwise Deductible” rule.
3.2
LOGISTICS OFFICE
The Logistics Office maintains records of University Motor Vehicle use by employees and calculates
FBT payable by the University based on the Statutory Fraction derived by annualising the kilometres
travelled by each employee.
3.3
GRIFFITH ACCOMMODATION
The Manager, Griffith Accommodation provides information in respect of meals and accommodation
provided to Residential Advisors and Heads of Colleges, to support calculation of FBT applicable.
3.4
PAYROLL SERVICES
Business Services have a responsibility to:
•
recognise taxable benefits and advise the Manager, Financial Accounting of benefits being paid
under salary sacrifice arrangements for consolidation with other benefits provided;
•
manage and monitor the value of salary sacrifice benefits provided on a regular basis to ensure
any shortfall in FBT is recovered from the employee;
•
ensure Reportable Benefit information is included on Payment Summaries as advised by the
Tax Compliance Officer;
•
remit Payroll Tax on Fringe Benefits as advised by the Manager, Financial Accounting.
3.5
FINANCE AND BUSINESS SERVICES (PFS)
The Manager, Financial Accounting, PFS is required to:
•
provide advice and training to University staff;
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FINANCIAL MANAGEMENT PRACTICE MANUAL
GRIFFITH UNIVERSITY
•
reconcile and record FBT expenses in a timely manner to meet the University’s statutory
reporting and lodgement obligations
•
prepare and arrange lodgement of the University’s annual Fringe Benefits Tax Return
•
collate and prepare Reportable Benefits Summary for inclusion in Employees Payment
Summary;
•
calculate payroll tax payable on Fringe Benefits and advise HRM of amount to be included in
regular payroll tax payments;
4
RECORDS
The University must retain supporting documentation for all accounting transactions and information,
which substantiates the calculation of FBT. Records are to be kept for five years.
The Manager, Financial Accounting will liaise with University Elements to ensure that appropriate
processes are established for recording and substantiating FBT calculations.
5
FURTHER INFORMATION
For further information, contact Manager, Financial Accounting – Ext 57024.
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Page 4 of 4