COVID-19 has required a rethink of many usual work practices, in particular the benefits provided to employees. Employees may have received additional benefits due to COVID, such as paying for or providing them with equipment that enables them to work from home. Further, arrangements around traditional benefits such as motor vehicles and car parking may have been altered. Strictly, the law has not changed and the usual Fringe Benefit Tax (FBT) considerations apply, but they will need to be revisited this FBT season given the changed circumstances.
The following are some of the key areas to think about when preparing your FBT return in the coming months:
Working from home
If you have provided employees with items to enable them to work from home, these are generally exempt. Laptops, portable printers, and other electronic devices that are primarily used by employees for work purposes are specifically exempt.
In addition, the minor benefits exemption, or the otherwise deductible rule, should apply to reduce the taxable value of other benefits, such as the use of a monitor, mouse or keyboard that are otherwise used in the workplace, the provision of stationery or computer consumables, or where phone and internet access is paid or reimbursed.
The minor benefits exemption applies for minor, infrequent, and irregular benefits under $300.
The otherwise deductible rule allows you to reduce the taxable value of benefits by the amount that your employee could have otherwise claimed a deduction if they had incurred the expense themselves.
If your office was closed on a particular day or for a period due to COVID, and therefore the work car park was also closed, you will not have provided a car parking benefit on those days.
Further, if your office was not closed but the commercial parking stations within a 1km radius of your business premises were closed on a particular day due to COVID, there will be no car parking benefits provided. Similarly, if the car parking rates for all day parking were discounted or reduced to nil, you should review the value of any benefit provided compared to prior years or if a car parking benefit was provided at all.
Car returned to employer’s business premises
A car that you ordinarily provide to your employee is not taken to be available for your employee’s private use if all of the following apply:
- the car is returned to your business premises;
- your employee cannot gain access to the car; and
- your employee has relinquished an entitlement to use your car for private purposes.
Similar rules may also apply where a car is garaged at an employee’s home.
Your employees’ driving patterns may have changed due to COVID.
If you use the operating cost method, you may have an existing logbook. You can still rely on this logbook to make a reasonable estimate of the business kilometres travelled.
Alternatively, you can also choose to keep a new logbook that’s representative of your business’s use throughout the year.
Accommodation, food, and transport
The FBT emergency assistance exemption may apply if you have provided emergency accommodation, food, transport, or other assistance to an employee. For example:
- expenses incurred relocating an employee, including paying for flights home to Australia;
- expenses incurred for food and temporary accommodation if an employee cannot travel due to restrictions;
- benefits provided that allow an employee to self-isolate or quarantine; and/or
- transporting or paying for an employee’s transport expenses, including car hire and transport to temporary accommodation.
Items that help protect employees from COVID-19
You may need to pay FBT on items you give your employees to help protect them from COVID-19 while at work. These may include gloves, masks, sanitisers, anti-bacterial spray.
These benefits are exempt from FBT under the emergency assistance exemption if you provide them to employees:
- who have physical contact with – or are in close proximity to customers or clients while carrying out their duties; or
- are involved in cleaning premises.
Examples of this type of work include medical professionals (such as doctors, nurses, dentists, and allied health workers), cleaning staff, airline staff, hairdressers, and the hospitality industry.
If your employees’ specific employment duties are not of the kind described above, the minor benefits exemption may apply.
If you require assistance in determining which cost fall under FBT, contact our expert team at Calibre Business Advisory can assist.