Fringe Benefits Tax Flashcards
When was FBT introduced and why?
- Because employers were paying employees largely in benefits to avoid paying tax and the employer also got to claim the benefit as a tax deduction
Who pays FBT and how what are finge benefits classified as?
Employers. Classified as a form of non-assessable non-exempt income as it isn’t assessable for he employee but tax has still been paid on it by emoloyer
When is the FBT year?
1 April - 31 March
At what value do fringe benefits need to be reported on an employee’s PAYG payment summary?
If taxable value exceeds $2000 then the grossed-up value of reportable benefits must be included.
How do you calculate the amount to put in the PAYG payment summary as reportable fringe benefit?
Take the taxable value and gross up (times) by 1.8868 regardless of whether benefit is type 1 or 2.
When are FBT returns due?
21 May
If an employee makes a contribution to a fringe benefit what happens to the taxable value?
It decreases by that amount
What is the otherwise deductible rule?
Give an example
When the taxable value of a fringe benefit is reduced by the amount the employee would have been entitled to claim as a tax deduction if they incurred the expense themselves.
If an employee paid $500 for a training course themselves, they could deduct this from taxable in come on their return reducing taxable value to $0.
To reimburse an employee using otherwise deductible rule what does the business need to do?
Keep an employee declaration signed by employer with details of expense to state it was an expense payment and would have been deductible on employees tax return.
Is grossed up value of FBT reportable in whole decimals or rounded to nearest cent?
Whole dollars. Cents ignored. $3000.35 and $3000.85 both become $3000.
What is a type 1 and 2 fringe benefit and what is gross up value of each?
Type 1- when GST is included in cost of fringe benefit. 2.0802
Type 2 - when GST isn’t included in cost of benefit 1.8868
For private use car calculator operating cost method are percentages rounded up or down to how many decimal places?
Rounded down to 0 decimal places. Whole numbers. Ie 54.4% and 54.8% both become 54%
When does a car fringe benefit apply when an employee gets a work car.
When the car is available for private use.
What are the 2 methods for determining the taxable value of the car benefit?
Statutory Formula - used by 80% as other is a lot more complicated.
(Cost price of vehicle x 20% flat statutory rate for km travelled x days available) / days in year - running costs paid by employee
Operating Cost method uses total operating costs for the year.
Total operating costs x % private use - employer contributions.
Operating costs include running costs, deemed interest, depreciation.
If operating cost chosen but statutory formula is lower, the lower is applied
What is imputed interest?
5.2% represents the cost of not being able to otherwise invest the funds spent on the vehicle.
This is a benchmark/statutory rate set by government for FBT purposes.
