Tax Queries
Examples
1. Are purchases made from University Consulting funds exempt from FBT?
Consulting funds are not exempt from FBT.
Expenditure such as seminar attendance fees, airfares (where the private component is not greater than
the business component), professional membership fees and amounts that would otherwise be an
allowable deduction to the employee had the University not paid for or reimbursed the expense are
exempt from FBT.
Items purchased with consulting funds remain the property of the University, however this does not
automatically exempt the items from fringe benefits tax. Fringe benefits tax is a ‘payment’ to an
employee but in a different form to salary or wages. Benefits may also include rights, privileges or
services.
For example a fringe benefit may be provided when an employer:

Reimburses an employee for the purchase of second laptop with the same FBT year

Allows an employee to use a work car for private purposes

Pays an employee’s child care costs whilst away on business

Gives an employee a cheap loan

Rents a university owned house to an employee at a discounted rate (a rate less than the
current market rate as determined by a third party)

Non cash benefits to employees in lieu of salary or wages
2. A member of the academic staff has requested reimbursement for a desktop computer for
working from home. Will this incur FBT as it is not a laptop? The staff member wants the cost to
be charged to his grant for the reimbursement plus the FBT to be no more than $1,500. The cost
of the computer was $1,765 including GST. Can you please advise how much he can be
reimbursed?
A desktop computer provided by Flinders University and located at the employee's residence will be a
residual fringe benefit unless it is an exempt benefit. Subsection 47(3) provides an exemption where an
employee has personal use of an employer's property but only where it is ordinarily located on the
employer's business premises and wholly or principally used directly in connection with business
operations. Section 47(3) will not apply as the desktop is ordinarily located at the employee's residence,
not on the employer's business premises.
Fringe Benefits Tax will therefore be payable by the employee from their own after tax income (not
consulting or grant funds) should a reimbursement be paid to them for the cost of the computer.
3. Does Flinders University pay any tax in Australia? Do you have a certificate issued by the Tax
Office which shows that Flinders is a legal entity and pays tax in Australia?
Flinders University is exempt from Income Tax in Australia under s 50-B of the Income Tax Assessment
Act 1997(ITAA97). Flinders University however does pay Goods & Services Tax (GST) and Fringe
Benefits Tax (FBT) in Australia. Flinders University has notification of Registration of an Australian
Business Number (ABN) as issued by the Australian Taxation Office effective 1 July 2000.
4. Does Flinders University have to invoice GST Branch members for sales made between them?
Flinders University of South Australia has its own GST Group and GST Branch. A group and branch
account for GST differently.
Flinders University GST Group members are;
 The Flinders Art Clinic Trust
 Flinders Consulting Pty Ltd
 National Institute of Labour Studies Foundation Inc
16 929 151 772
70 058 894 456
30 446 004 417
Flinders University GST Branch Members are
 Flinders University of South Australia
 Centre for Remote Health
 AHURI Southern Research Centre
65 542 596 200
65 542 596 200 003
65 542 596 200 004
A GST branch effectively operates as a distinct entity for reporting purposes and GST is payable on
taxable sales between GST branches and the parent entity.
This means that when a GST branch member makes a taxable sale it is required to issue a tax invoice
that must show the registration number of the GST branch (which incorporates the Australian business
number (ABN) of the parent entity).
http://www.ato.gov.au/businesses/content.aspx?doc=/content/13190.htm
5. I am travelling interstate Thursday evening for a 1 day conference on Friday and my supervisor
has approved for me to stay the weekend, flying back home Sunday evening. Will FBT apply/will
I have to pay part of the air fare?
Where the private days exceed business days, it is difficult to sustain the argument that the prime
purpose is for business. Therefore, FBT will be incurred as the private days exceed the business days.
(i.e. 1 business day and 2 private days). The assessment of private days does not change where the
private days are on a weekend.
(a)
Flight cost $260 (including GST)
(b)
Private component = 66% (2 of 3 days)
Private component: (a) x (b) = $260 x 66%
As the University policy on Combining Business and Private Travel requires that staff pay the private
component, rather than the University incurring FBT, the private component to be reimbursed by the
employee = $171.60 (including GST)
6. One of our staff is travelling to Brisbane for a 3 day conference but returning to Adelaide via
Melbourne and spending the weekend in Melbourne on their own time.
Can you please advise if there are any FBT implications for this travel?
FBT will only be incurred if the return flight from Brisbane via Melbourne to Adelaide costs more than the
return flight from Brisbane to Adelaide direct. Any additional cost will have to be reimbursed by the
employee to the University.
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There are no other FBT implications of this travel as the predominant purpose of the trip is business
(assuming a minimum of 4 hours has been performed on each work day) and the private component of
the travel does not exceed the number of business days.
7. A postgraduate PhD student was funded for a research trip to France. She has asked if she
needs to do a travel diary as the details are in the application and the student was away for 7
weeks. The student, supervisor and Executive Dean have signed to say the trip was completed
according to its purpose. Will the student be required to complete a travel diary?
The ATO (MT2038) requires employees to complete travel diaries where the employer pays or
reimburses the employee’s expenses for travel outside Australia. As the student does not currently fall
under the definition of an employee there is no such requirement. This is also supported with the
University policy on Combining Business and Private Travel.
8. A staff member is going on OSP for Semester 2 on an approved study program for an extended
period of time, will they be required to fill in a travel diary for every day of the 4 months they are
away or is there another acceptable means of meeting requirements which is less onerous on
the traveller?
The travel has been booked and paid for by the University through Phil Hoffman.
For longer trips like sabbaticals the ATO unfortunately states that entries would still need to be
maintained on a regular basis throughout the trip, however some flexibility is granted but it is generally
expected that entries be made on at least a weekly basis. The overall objective is to provide a record of
events giving sufficient basis on which to determine the extent to which the trip was undertaken for a
deductible purpose (i.e. work/business purpose) and to calculate any fringe benefits tax.
If the employee’s daily activities can be obtained from another source (e.g. conference confirmation
advice) then a travel diary entry for that event would not need to list start and end times and activities as
these are listed in the confirmation.
ATO miscellaneous tax ruling MT2038, paragraphs 11 to 13 go into more detail regarding longer trips
like sabbaticals.
9. We have an employee who sometimes needs to travel on business with their children
accompanying them as they are a sole parent.
I would like to draw your attention to the following clause in the travel policy and ask if we can
use this clause to have a supervisor approve in advance to use the employees consulting fund
to pay for their children to travel or that the FBT be paid for from the fund also?
9.5.2 Dependent care expenses arising from University travel
While staff members are responsible for making their own dependent care arrangements, the
University may provide financial assistance where additional dependent care costs are directly
incurred as a result of the staff member travelling on University business. Requests for the
reimbursement of such costs must be made to the Authorised Person in writing, in advance of
travel. Proof of the expenditure must be submitted to be reimbursed.
Private travel provided to associates of an employee is subject to FBT. Accommodation, airfares and
other expenses paid by the University on behalf of the partner and/or child for all of the trip would also
be subject to FBT as these costs are not work related.
Unfortunately the ATO does not allow FBT to be paid for from consulting funds. The ATO states that any
FBT payable by an employee is must be made from the employees own after tax income.
http://www.ato.gov.au/taxprofessionals/content.aspx?menuid=43140&doc=/content/00218241.htm&pag
e=21&H21
10. How much detail is required to be included in the travel diary? I have listed on 3 lines the 3
countries I visited and what I did there. If I am attending a conference over three days do you
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expect me to say three times that I was in lectures listening to speakers instead of saying it
once? If so, this is bureaucracy gone mad!
Miscellaneous Tax Ruling MT2038 outlines the requirements of Fringe Benefits Tax on Travel Diaries.
Section 5, income tax law requires an employee to record in a diary each business activity, the elements
required are:




the place where the activity was undertaken
the date and approximate time when the activity commenced
the duration of the activity; and
the nature of the activity
It is a requirement of the University to ensure compliance with the law as outlined by the ATO. It’s not a
policy that Flinders University made up.
For further information please refer to the link below;
http://law.ato.gov.au/atolaw/view.htm?locid='MTR/MT2038/NAT/ATO
An example of a completed travel diary form can be found on the Flinders University intranet.
11. Can you please tell me the University Charity Tax Concession number?
Flinders University was endorsed for Charity Tax Concessions on the 8 July 2005. There is no specific
Charity number. The ABN is used as the equivalent number and for Flinders University this is 65 542
596 200.
Flinders University is also registered for the following;




Goods and Services Tax (GST) from 1 July 2000
Income Tax Exempt Concession (ITEC) from 1 July 2000
Deductible Gift Recipient (DGR) from 1 July 2000
Goods and Services Tax Concessions from 1 July 2005
12. Are there new rates from the ATO for reasonable per diem allowances for 2012-2013?
The rates for 2012/2013 have been updated by the ATO on the 27th June 2012 and are available on the
Flinders University intranet under the following link;
http://www.flinders.edu.au/finance/tax-information/tax-information_home.cfm
Please note that the exempt portion of a daily allowance has risen from $113.10 to $116.25
13. What needs to be included in an invoice for it to be classed as a valid tax invoice by the ATO?
A valid tax invoice is a document that meets the following criteria;
 It is issued by the supplier, unless it is an RCTI (in which case it is issued by the recipient)
 It contains enough information to enable the following to be clearly identified;
o The suppliers identity and ABN
o A brief description of what is sold, including the quantity (if applicable) and the price of what
is sold
o The extent to which each sale is a taxable sale – this can be shown separately or if the
GST to be paid is exactly one-eleventh of the total price, as a statement such as ‘total price
includes GST’
o The date the document is issued
o The amount of GST (if any) payable for each sale
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o
o
If the document was issued by the recipient and GST is payable for any sale – that the
GST is payable by the supplier
That the document was intended to be a tax invoice or an RCTI if it was issued by the
recipient
In addition, if the total price of the sale is at least $1,000 or if the document was issued by the recipient,
the recipient's identity or ABN must be able to be clearly identified.
If a document issued by a supplier does not contain all of the required information, you may treat that
document as a Valid Tax Invoice if the missing information can be clearly identified from other
documents provided by the supplier.
Without a valid tax invoice, the University is unable to claim back the GST paid.
14. How do I tell if a person working for the University is an employee or an independent
contractor?
A person who is an employee of the University will usually report to a supervisor who will be responsible
for that person’s work direction. Work undertaken by an employee needs to be carried out in a particular
way in accordance with the University policies, practices and procedures. Ordinarily, the University
would control how the work is performed throughout an employee’s engagement.
An independent contractor is usually a person who has established their own business and puts
themselves out into the marketplace in a commercial capacity undertaking work for a variety of different
clients. An independent contractor will enter into a contract for services with the University and is usually
paid to achieve agreed results within an agreed timeframe. An independent contractor generally controls
how and when the work is performed.
Please also see the University policy on Engagement of Individuals as Independent Contractors and the
ATO decision tool to assist in determining is a person is an employee or independent contractor
15. Is a contractor required to provide an invoice to be paid under the contract and does the
University pay GST on these payments?
Yes,all payments made to a contractor must be supported by an invoice / tax invoice (where contractor
is registered for GST). Invoices must not be prepared by University departments on behalf of contractors
in any circumstances.
Where a contractor is registered for GST, generally any supplies made by the contractor will be subject
to GST. It is not up to the University to decide whether the contractor should / should not charge GST.
Where a contractor does charge GST, then a valid tax invoice must be submitted to the University by
the contractor before payment will be approved.
16. I have a question about an impending parcel. I have ordered AUD $3271.19 worth of
equipment from the US and its being posted here. My understanding is that the package will
need GST+duty from customs? I looked it up on the customs website and went through the
process there, and after the 'first notice' from Aust Post, I need to lodge the import declaration
B374 form and get my package. Just had a coffee with another employee and they said the
University is exempt from the GST? According the website if the ABN holder is registered for
GST deferral then the B374 can't be used. So hypothetically what do I need to do next? (My
package hasn't been dispatched but I like to know what to do early)
The University is not exempt from GST; however it is entitled to GST concessions that mainly relate to
gifts, donations, fundraising etc. Flinders University is exempt only from Income Tax.
The package from the US will have customs duty + GST added to it.
The University is not registered for GST deferral as the quantity and value of good imported is not high
enough to warrant registering for the GST deferral scheme.
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