2011 FBT Update
1
What is new in 2011
1.1
There are no changes to the 2011 FBT return
1.2
ATO Interpretative Decisions – examples:
 ATO ID 2010/219: Fringe Benefits Tax – Shares provided to
employees upon exercise of rights granted under an employee
share scheme
 ATO ID 2010/183: Fringe Benefits Tax – Exempt Benefits – Remote
area housing benefits – new novated lease arrangement
 ATO ID 2010/182: Fringe Benefits Tax – Exempt Benefits – Remote
area housing benefits – salary sacrifice arrangement
 ATO ID 2010/163: Fringe Benefits Tax – Exempt Benefits – Motor
vehicle not for private use – tram
 ATO ID 2010/151: Fringe Benefits Tax – Property Fringe Benefit:
money – tangible or intangible property
 ATO ID 2010/142: Fringe Benefits Tax – Employee share scheme:
indeterminate rights not fringe benefits
 ATO ID 2010/135: Fringe Benefits Tax – Property fringe benefits:
gift cards
 ATO ID 2010/97: Fringe Benefits Tax – Third party recipient
deemed to be an associate: friend of an employee
1.3
ATO Tax Determinations – examples:
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1.4
ATO TD 2010/13: Annual changes – Car parking threshold
ATO TD 2010/6: Annual changes – Benchmark interest rate
ATO TD 2010/5: Annual changes – Cents per kilometre rates for
motor vehicles other than cars
ATO TD 2010/4: Annual changes – Living away from home
allowance
ATO TD 2010/3: Annual changes – Indexation factors for valuing
non – remote housing
ATO TD 2010/2: Annual changes – FBT Record keeping exemption
threshold
Recent legislation
Changes to section 23AG of the Income Tax Assessment Act 1936
TD 2011/1: Proposed legislative amendments to employees working
overseas under “fly-in fly-out” arrangements.
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
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distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
Currently, the exemption is limited to employees working under
“fly-in/fly-out” arrangements within Australia. The exemption will
extend to Australian residents working in remote overseas areas who
are under “fly-in/fly-out” arrangements.
Approved worker entitlement funds
The Commissioner will now be allowed to endorse a fund as an
approved worker entitlement fund or an entity for the operation of an
approved worker entitlement fund when satisfied that it meets
legislative requirements instead of the Governor-General prescribing
the fund within a regulation.
NTLG Minutes – May 2010
‘Substantially identical functions’ test in subsection 58X(3)
ATO agreed that devices such as iPads do not have
substantially identical functions as a laptop computer. Therefore, the
exemption will apply provided all other requirements have been
satisfied, including the requirement that the device is used ‘primarily for
the employee’s employment’.
TLA (2009 Measures No. 4) Act 2009 - Donations made under salary
sacrifice arrangements.
No FBT applies where a donation is made under a salary
sacrifice arrangement to an organisation that is a Deductible Gift
Recipient. Employees are not entitled to claim the salary
sacrificed donations in their own income tax returns.
TLA (2009 Measures No.1) Act 2009 – Fringe benefits tax and
changes to foreign employment income.
Benefits provided to employees whose foreign employment
income is exempt under section 23AG of ITAA 1936 are not
subject to FBT. In the 2009 – 2010 Federal Budget changes
were made to limit the exemption for foreign employment
income derived by Australian residents who are engaged in a
foreign service for a period of 91 days or more to certain types
of employment. Benefits provided to employees whose foreign
employment income is not exempt under section 23AG may be
subject to FBT.
1.5
ATO releases
 The ATO has released a fact sheet on exempt car benefits. The
fact sheet provides a listing motor vehicles which are exempt
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
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from fringe benefits tax (FBT), and vehicles that which are not.
The fact sheet can be obtained from the ATO website.
A fact sheet on exempt work-related items. The fact sheet
provides an explanation of when the provision of certain workrelated items is exempt from FBT and a list of items that qualify
for the exemption.
A fact sheet about Fringe Benefit Tax and Christmas Parties.
A guide for small business employers who provide fringe
benefits to determine whether FBT is payable.
A fact sheet on salary-sacrifice arrangements. The fact sheet
provides information about the requirements for an effective
salary sacrifice arrangement, what benefits can be included and
the implications of entering into such an arrangement.
Virgin Blue Airlines Pty Ltd v. FCT: The Full Federal Court held
that a car park which was approximately 2km from the
employee’s primary place of employment was not “in the vicinity
of” their primary place of employment and therefore not subject
to FBT.
1.6
Benchmark rate for 2011 FBT year
- The benchmark interest rate for the 2011 FBT year has been
increased from 5.85% to 6.65%;
- The car-parking threshold for the 2011 FBT year has been
increased from $7.25 to $7.46 a day.
2
2.1
FBT audit activities and traps for 2011
Lapsed lodgment of FBT returns
- The ATO will contact organisations that have previously lodged
an FBT return and have ceased doing so to verify their FBT status.
2.2
Employee contribution for fringe benefits
 Employee contributions are assessable income to employers
and subject to GST;
 The amount should have been included at Item 6, label “I” of the
2011 Company return.
 Employee contributions processed by journal entries must be
correctly documented and processed at an appropriate time.
 Employers should receive declarations from their employees to
substantiate fuel and oil paid by employees.
2.3
Employers paying an employee’s car hire purchase (HP) instalments
- Such HP payments are treated as expense payment fringe
benefits and not as car fringe benefits;
- The “once-only” deductions only apply to the interest component
of the HP instalment;
- The principal component of each HP instalment is not reduced
by the “once-only” deduction.
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
- Employers cannot use type 2 gross-up rate on such HP
Payments.
2.4
Tips in relation to car fringe benefits
 Cars garaged at an employee’s residence may be a car fringe
benefit.
 Ensure Logbooks are kept when using the operating cost
method.
 The luxury car tax threshold does not apply when calculating the
deemed interest and depreciation under the operating cost
method.
2.5
Errors with expense payment fringe benefits (EPFB)
 Treating an EPFB as a taxable allowance;
EPFB – subject to FBT, treated as exempt income for
employees;
Allowance – subject to PAYG-W; taxed as income to
employees;
 Failing to comply with substantiation requirements in applying
the “otherwise deductible rule” to reduce the taxable value of an
EPFB;
Employees need to provide written evidence, e.g. original
receipts, and declaration to ensure the expenses were incurred
by the employees and had the nexus with the employees’
incoming-earning activities if the “otherwise deductible” rule is
applicable;
 Travel diary for “extended travel EPFB” (more than 5 continuous
nights) inside and outside Australia
 Private expenses paid through business bank accounts
Many small family-owned businesses are paying for private
expense items and fail to account for all these benefits for FBT
purposes;
 Reimbursement of internet expenses for employees working
from home
An employer may pay the whole amount of an employee’s home
internet costs without verifying the business portion of the
usage;
2.6
Errors with employer provided computers to employees
 Notebook or laptop computers to employees are an exempt FBT
benefit provided they are used predominantly for work.
 Desktop computers taken home by employees are subject to
FBT, though the “otherwise deductible rule” can reduce the
taxable value of the benefit;
2.7
Problems with the reportable fringe benefit amounts
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
- An employer will only need to record reportable fringe benefits
on an employee’s payment summary where benefits received by
the particular employee exceed $2,000 per year;
- Once the threshold has been exceeded, all reportable benefits,
including the $2,000 threshold, must be recorded on an employee’s
payment summary;
- FBT-exempt employers are still required to disclose reportable
fringe benefits on their employees’ payment summaries;
2.8
Fringe benefits that are excluded from the reporting requirements
Some benefits do not count towards the $2,000 threshold and are not
reported on an employee’s payment summary. The more common
examples are:
 Car parking;
 Meal entertainment:
 Pooled cars
 Remote Area Housing
 Entertainment Facility Leasing Costs
2.9
Allocating shared benefits among employees
Shared benefits, e.g. pool cars, need to be allocated among employees
by either:
- portion of tax payable method;
 determined by annualising the km travelled by each
employee; complicated and error-prone;
- equal apportionment method;
 the taxable value of the benefit shared equally among users;
- overnight rate calculation method;
 the benefit is allocated to employees on the basis of the
number of nights the shared car was taken home by the
employee;
2.10
ATO audit focus for 2011:
 Cars particularly following the investment allowance.
 The correct accounting treatment of employee contributions that
reduce taxable value of benefits provided.
 Minor benefits
 Living-away-from-home allowance
3
3.1
Problems associated with 2011 FBT Return
Classifying benefits as Type 1 or Type 2
 Type 1 benefits are those that allow the employers to claim a
GST input tax credit;
 The taxable value of the benefit provided is grossed up at
2.0647;
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
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3.2
Employers not holding valid tax invoices or choosing not to claim
the GST input tax credit are still required to use the higher
gross-up rate;
Type 2 benefits are those benefits that are not Type 1;
Certain in-house benefits are always Type 2 benefits, e.g. inhouse property benefits, and are grossed up at 1.8692.
Recording entertainment related benefits at Item 22
 Meal entertainment related benefits calculated using the actual
method should be reported according to the type of benefits
provided:

Fringe benefit types
Label code at Item 22
Expenses payment
E
Airline transport
H
Property
K
Tax-exempt body entertainment
L
Residual
M
Entertainment facility leasing expenses, e.g. hiring of corporate box
for sporting event, should be recorded at Item 22M of the 2010 FBT
return (residual benefits), not 22P (meal entertainment).
3.3
Recording “value of reduction” at Item 22 (c)
 A reduction amount for certain benefits can be recorded at Item 22
(c);
 Though most of such reductions are claimed under the “otherwise
deductible rule”, there are other reductions that may apply:
 a maximum of $1,000 reduction for in-house fringe benefits and
airline transport benefits;
 50% reduction to benefits that relate to housing assistance to
employees in remote areas;
 50% reduction to benefits that relate to holiday transport for
expatriates working in Australia.
3.4
FBT exempt hospitals and PBIs – capping problems with FBT return
 Where the total grossed-up taxable value of benefits provided to an
employee exceeds the relevant capping threshold, i.e. $17,000 for a
hospital employee or $30,000 for a PBI employee, the employer
must lodge a FBT return and pay FBT;
 Only car parking fringe benefit is excluded from the threshold. Car
parking expense fringe benefit, i.e. reimbursed employees with car
parking fee, is not excluded;
 Where the threshold has been exceeded by an employee, the
employer should record all benefits at Item 22, including those that
are not counted towards the capping threshold, e.g. meal
entertainment;
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
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Only the gross-up taxable value of benefits in excess of the capping
amount per employee must be aggregated and recorded at Item
13c.
4
4.1
Car Fringe Benefits
Circumstances where car fringe benefit rules do not apply
 The vehicle provided is not a ‘Car” and the private use is basically
limited to the following:
 Home to work travel; and
 Other minor, infrequent and irregular travel.
 The car is not held by the provider e.g. it is held by the employee
and the employee receives a fixed car allowance.
 Hire cars – where the hire period is less than 12 weeks.- this benefit
is treated as residual fringe benefits and is subject to the ‘Otherwise
deductible rule”
 Taxis, panel vans, utility trucks and other commercial
vehicles(designed to carry a load of less than 1 tonne) which are
not principally designed to carry passengers and their private use is
limited in the way described at (a) above.
4.2
Statutory formula method
 Taxable value = A x B x C/D – E
where:
A
= the base value of the car
B
= the statutory fraction
C
= days during the FBT year the car fringe benefit was
provided
D
= number of days in the FBT year and
E
= the amount of the employee contribution
 The base value of the car is the price of the car, including GST,
delivery charges, but not registration and stamp duty charges. The
base value of the car can be reduced by one-third from 1 April after
the fourth anniversary of the date on which the car was acquired.
 The statutory fraction is based on the mileage done in the FBT year
Kilometres during the FBT year
Fraction
Less than 15,000
15,000 to 24,999
25,000 to 40,000
Over 40,000

Statutory
.26
.20
.11
.07
Number of days available for private use is calculated after taking
into consideration following situations.
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
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Cars garaged at the employee’s place of residence are deemed
to be available for private use, regardless of how the car is
actually used by the employee;
Cars garaged at the employer’s business premises, will only be
considered available for private use where the employee
actually uses the car for private purposes;
Cars that are not covered by either A or B above, will be
deemed to be available for private use, where the employee is
entitled to private use, or has custody and control of, the car.
Note:
 The car is deemed to be available for private use where it is
provided to an employee for overnight business trip.
 A car garaged overnight on a business premises is deemed
to be available for private use where the home is attached to
the business premises.
 Days available for private use can be reduced for cars being
repaired at panel beaters or mechanics.
4.3
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An employee can make an “employee contribution” that reduces the
taxable value of a car fringe benefit in two ways, namely:
 the employee personally incurs car expenses during the FBT
year, for which they receive no reimbursement: or
 the employee makes an after-tax contribution to the employer.

The following car expenses can be considered as employee
contribution:
 the registration of, or insurance in respect of , the car;
 repairs to or maintenance of the car or
 fuel for the car.
Operating cost method
 Car fringe benefit under the operating cost method is calculated
with the following formula:
Taxable value = (C x (100% - BP)) – R
Where: C = the total GST inclusive operating cost for the car
during the FBT year
BP
= the business percentage of the car determined
by the log book; and
R
= the amount of recipient’s payment (i.e.,
employee contribution)
 The operating costs include the actual running costs incurred by the
employer and deemed running costs (i.e., where the car is owned
or hire purchased by the employer. Dealer delivery charges are
included in the cost base of the car).
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.

Note:
Deemed running costs i.e., deemed depreciation and interest, are
included in calculation where the employer either owns or has
financed the acquisition of car via a hire purchase agreement;
If the car is leased, the GST inclusive value of lease payments is
included in the calculation irrespective of the fact that the car is a
luxury car;
If during an FBT year an employer pays out a lease contract then
the employer will need to include:
 the relevant lease charges until the lease residual was paid
out; and
 deemed depreciation and interest from the time the employer
paid out the lease residual. i.e., the deemed depreciation and
interest are based upon the lease payout figure and not the
original value of the car.
The taxable value of a car fringe benefit under this method is limited
to the private use percentage of the car during the FBT year. In
order to estimate the number of business kilometres an employer
must take into consideration all relevant matters, including:
 information contained in log book which must be maintained
for a continuous period of at least 12 weeks.
 odometer records which must be kept every year; and
 any variation in the pattern of business use of the car
throughout the FBT year.
4.4
Which gross-up rate is to be used
 An employer must apply the correct gross-up rate once the taxable
value of a car fringe benefit has been calculated. A car fringe
benefit will be a Type 1 benefit where the employer is entitled to
claim input tax credits with respect to the acquisition of the car. It
does not matter whether a valid tax invoice is available or the
employer chooses not to claim the input tax credit.
 Type 2 gross-up rate has to be used for benefits that are not
grossed up by Type 1 gross-up rate.
4.5
Preparing the 2011 FBT return for car fringe benefits
 For cars fringe benefits using the statutory formula method, the
gross amount of the taxable value provided is to be recorded in
Item 22A (a);
 For cars fringe benefits using the operating cost method, the gross
amount of the taxable value provided is to be recorded in Item 22B
(a);
 All employers are assumed to have used the statutory formula
method unless they have elected to use the operating cost method
by using Item 22B (a);
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.

An employer can elect the most appropriate valuation method on a
“car-by-car” basis for a particular FBT year.
4.6
FBT planning for car fringe benefits
 An employer will not be liable for FBT in relation to a car where the
car is not deemed to be available for the private use of an
employee. When an employee is absent from work, the employee
can garage the car at the business premises of the employer.
 Employees can sell their cars to their employers at market value
and the employers can then provide them back to their employees
as car fringe benefits. This way, the base value of the car will be
reduced as the original cost of the car to the employee is ignored.
5
5.1
Meal Entertainment Fringe Benefits
What is a meal entertainment fringe benefit
 Entertainment is defined by S.32-10 of ITAA 1997 as:
 entertainment by way of food, drink or recreation; or
 accommodation or travel to do with providing entertainment by
way of food, drink or recreation.
 ‘Recreation’ is defined as any form of amusement, sport or leisuretime pursuit, such as:
 an entertainer(e.g., a musician, band or comedian);
 a game of golf or tennis;
 tickets to a movie, theatre or sporting event; and
 Sightseeing tours, harbour cruises, etc.
 Recreation generally cannot be valued for FBT purposes using the
meal entertainment valuation methods because ‘recreation’ is not
included in the definition of ‘meal entertainment’ for FBT purposes.
It should be treated as an expense payment fringe benefit as the
expense is reimbursed by the employer;
 Recreation expenditure may need to be reported on an employee’s
payment summary while meal entertainment benefit is not a
reportable fringe benefit.
5.2
Meal entertainment valuation method
 Actual entertainment expenditure method
 Employers using this method need to determine meal
entertainment expenditure on the basis of either:
 the exact cost attributable to each employee and associate;
or
 a ‘per head’ apportionment, where an exact allocation cannot
be easily made from available information.
 Meal entertainment calculated under actual method must be
separately recorded at item 22 according to the type of fringe
benefit provided.
o Expense payment fringe benefit
- item 22E
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
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o Airline transport fringe benefit - item 22H
o Property fringe benefit
- item 22K; and
o Residual fringe benefits
- item 22M
 Under the actual method, an income tax deduction is generally
only allowed on that portion of meal entertainment expenditure
that is subject to FBT. GST input tax credits can only be claimed
on that portion of meal entertainment that is deductible.
 Advantages of using the actual method
 access to FBT exemptions
 the property benefit exemption will apply when food and
drink is provided to, and consumed by, a current employee,
on a working day, on the employer’s business premises.
 the minor benefit exemption under Sec58P will apply where
the GST inclusive cost of food and drink is less than $300
per employee.
 the exemption for taxi travel under Sec 58Z will apply where
taxi travel is provided with meal entertainment and the travel
is a single trip that begins or ends at the employee’s place of
work.
However, if under this method the company is not subject to
FBT, it cannot claim a deduction or a GST input tax credit in
respect of this meal entertainment expenditure.
 access to meal entertainment deduction with no FBT.
 providing meal entertainment to employees in an in-house
dining facility and property fringe benefit; and
 cash flow benefits for employers with higher proportion of
meal entertainment related to non-employees the expenses
of which is not subject to FBT under S. 41 but not deductible.
Disadvantages of using the actual method
 high compliance/record keeping cost;
 cash flow disadvantages for employers with higher
proportion of meal entertainment related to employees and
their associates.
50/50 split method
FBT is only payable on 50% of the employer’s total meal
entertainment expenditure. However, irrespective of whom is being
entertained (i.e., employees, associates, clients, contractors etc.),
only 50% of an employer’s total meal entertainment expenditure is:
 deductible; and
 eligible for GST input tax credits.
Advantages of using the 50/50 split method
 simple to use;
 reduces compliance costs;
 cash flow advantages with higher proportion of meal
entertainment related to employees the expenses of which
are subject to FBT.
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.

Disadvantages of using the 50/50 split method
 No FBT exemptions;
 The taxable value of an employer’s meal entertainment
fringe benefit cannot be reduced by the contributions made
by employees or their associates;
 cash flow benefits for employers with higher proportion of
meal entertainment related to non-employees the expenses
of which is not subject to FBT under S. 41 but not deductible.


12-week register method
Under this method, the taxable value of the fringe benefit is
calculated by multiplying the employers’ total meal entertainment
expense for a FBT year by the employer’s register percentage
calculated as:
Taxable value = Total meal entertainment expense x register
percentage
The register percentage is calculated on the basis of a register
continuously maintained for a period of 12 weeks as follows:
A/B x 100%
where:
A = Total value of meal entertainment provided to employees during
the 12 week period
B = Total value of meal entertainment provided to all persons during
the 12 week period
Taxable value of meal entertainment calculated under this method
is to be recorded at item 22P of 2011 FBT return.
GST input tax credits can only be claimed in respect of the meal
entertainment on which FBT is being paid.
Advantages of using the 12-week register method
 reduces compliance costs;
 FBT exemptions and the minor benefit exemption are
applicable.
Disadvantages of using the 12-week register method
 Finding a representative 12 week period truly reflective of a
normal entertainment pattern for the whole year may not be
that easy;
 Where an employer’s total meal entertainment expenditure is
20% higher than the amount incurred in the first FBT year
the register was kept, the register ceases to be “valid”.
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6
6.1
Salary Packaging
Employees earning less than $180,000 can still benefit from salary
packaging by limiting their salary packaging to the following benefits:
additional superannuation up to an employee’s concessional cap;
exempt FBT benefits, e.g. laptop computers, briefcase etc.;
benefits with no taxable value, e.g. through “otherwise deductible rule”;
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
concessionally taxed benefits, e.g. cars under the statutory method.
6.2
Salary packaging benefits subject to “otherwise deductible rule”
 An employee can claim an immediate depreciation deduction of the
asset if :
 the asset does not exceed $300;
 the asset is for producing assessable income; and
 the asset is not used to produce assessable income in a
business.
 Examples of these items include investment rental property assets
of employees that are less than $300 each.
6.3
Using associate leases
 An “associate lease” arrangement normally involves:
 an associate of an employee purchases a car from an arm’s
length party by hire purchase or finance;
 the associate leases the car to the employee’s employer
 the employer provide the car to the employee who earns more
than $180,000 as a car fringe benefit;
 If all the above transactions are done at arms length, it is likely that
Part IVA will not apply;
 The lease payments received by the associates may affect
payments from CentreLink or other government entitlements.
6.4
Benefits of salary packaging meal entertainment
 Employees earning more than $180,000 will benefit from packaging
meal entertainment using 50/50 method because:
 50% of the expenditure is not subject to FBT (though nondeductible to the employer); and
 the adjustment to the employee’s salary sacrifice amount for this
non-deductible portion is calculated on the basis of the company
tax rate of 30% instead of the employee’s marginal tax rate of
46.5%;
 if the employer is a FBT-exempt or rebatable employer, the
benefit, being a non-reportable fringe amount, is not taken into
account when determining whether the $17,000 and $30,000
ceilings have been exceeded.
6.5
Employees earning less than $180,000 packaging cars
 In general, an employee can benefit from such packaging if
 the car is not more than $30,000;
 the car benefit is calculated using the statutory method;
 the employee travels more than 15,000 Km during the FBT year;
 the employee makes an after-tax contribution to reduce the
taxable value of the benefit to nil.
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
6.6
Tax planning and superannuation
 Splitting spouse superannuation contributions
 Taxpayers can only split any superannuation contribution they
made on or after 1 January 2006;
 A taxpayer can generally only split up to 85% of their deductible
superannuation contributions with their spouse;

Benefits of using the superannuation co-contribution concession
 A taxpayer can make an eligible personal superannuation
contribution to a complying superannuation fund before getting
the concession;
 The level of matching under the co-contribution scheme is $1.00
for each dollar of personal superannuation contribution made,
with the maximum amount from Government capped at $1,000;
 The co-contribution entitlement is reduced by 3.33 cents for
every dollar above the lower income threshold of $31,920.
7
7.1
Distinction between travelling, Living away from home or relocation
Summary of FBT implications for benefits provided to an employee
when:
 travelling on work – benefits provided are not normally subject to
FBT under the “otherwise deductible rule”;
 living away from home – benefits provided are subject to FBT
concessions (e.g. allowance for food) and exemptions (e.g.
accommodation);
 relocated – benefits provided are subject to FBT exemptions and
concessions (e.g. temporary accommodation, storage of household
effects).
7.2
Factors to consider for employees travelling on work, living away from
home (LAFH) or relocating – deciding whether an employee has
relocated or not is determined by a collective consideration of all the
factors below:
Factors to consider
The employee’s existing work location
continues to be the employee’s
regular place of work
The employee retains his/her original
residence and intends using it once
he/she return to his/her usual place of
employment
Use of temporary accommodation
while away from home (e.g. motel or
hotel)
Family members do not accompany
Travel
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LAFH
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Relocating
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Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.
the employee
The employee has established an
alternative work location
Family members accompany the
employee
The employee has a clear intention to
return home after ceasing work at the
new location
The employee secondment is for a
limited or finite period of time
If the employee is an expatriate, they
have applied for permanent residence
The employee has disposed of his/her
original usual place of residence
The employee has purchased or
agreed to take on long-term
accommodation
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7.3
Types of benefits available to employees travelling on work
 Benefits provided to employees travelling on work are deductible
under the “otherwise deductible rule”;
 Different documentation requirements for travel within Australia and
overseas.
7.4
Types of benefits available to employees living away from home
 Employees should salary package benefits if they are required to
work living away from home. Benefits qualify for concessional FBT
treatment includes:
 LAFH Allowance – taxable value is reduced by exempt food and
exempt accommodation;
 Overseas employment holiday transport – taxable value is
reduced by 50% of actual cost when the travel is to the home
country;
 LAFH meals – taxable value is $42 per week for adult and $21
per week for children under 12.
7.5
Types of benefits available to employees being relocated
 Salary packaging of relocation benefits that qualify for concessional
FBT treatment will be very tax effective;
 Examples of such benefits include:
 temporary accommodation (exempt up to 6 months or 12
months if the employees sell their former home);
 temporary accommodation meals (taxable value is $2 per meal
for adult and $1 for children under 12).
Disclaimer: These notes are intended to be a guide only. Business Intranet Systems Pty. Ltd. (BIS), its directors, employees and consultants expressly
disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person
relying on a part or the whole of the contents. Do not act on the information without first obtaining specific advice regarding your particular circumstances
from a tax professional.
© 2011 `Business Intranet Systems Pty Ltd. This document is protected by international copyright laws. It is for your internal use only. Unauthorised
distribution or reproduction of this information, or any part of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum
extent possible under the law.