FBT – Major Changes

MAJOR CHANGES TO 2016 and 2017 FBT Returns

1. Increase in FBT rate

The FBT rate for the 2016 year has increased from 47% to 49%.

Due to the increase in the 2016 FBT rate, the amount of FBT payable by the employer will also increase.

Most employers pass on the cost of the FBT to their employees through salary sacrificing arrangements. Therefore employers will need to re-calculate the salary sacrifice amounts and ensure that the employee’s remuneration is appropriately reduced to absorb the increase in the FBT payable, this effectively means less take home pay for those employees.

You should note that the FBT rate increase to 49% is only for the 2016 and 2017 years. The FBT rate will reduce back to the previous level of 47% for the years ending 31 March 2018.

This change in rates will once again require employers to make adjustments to employees’ salary sacrifice arrangements due to the reduction in the FBT payable for 2018 FBT years onwards

2. Small business FBT exemption for portable electronic devices

Currently, there is an FBT exemption where a portable electronic device is provided to an employee primarily for work use. However, if two devices have similar functions (for example a laptop and a tablet); only the first is exempt from FBT unless the devices perform substantially different functions.

From the 1st April 2016, a small business entity, i.e. a business with an aggregated annual turnover of less than $2m, is able to provide more than one portable electronic device to be used primarily for work without incurring a fringe benefits tax liability, even where the items have substantially similar functions.

 3. Meal & entertainment concessions for not for profit employees to be capped at $5,000

Currently, employees of Not for Profit Entities, public benevolent institutions and Charities have either a $17,667 or a $31,177 FBT exempt benefits cap. A summary of these caps is included in the table below. In addition to these exempt benefit caps, these employers are able to provide meal entertainment benefits to employees with no FBT payable and these benefits are not included as reportable benefits on the employee’s PAYG Payment Summary.

From the 1st April 2016, a $5,000 cap on the amount of meal entertainment benefits that can be salary sacrificed by employees of not for profits will apply. Any benefits in excess of this cap will count towards the employee’s ordinary exempt benefit cap and any excess over this cap is subject to normal FBT treatment and will be taxable.

 Concessional FBT treatment for certain employers – Capped


*
Entity
*
Gross amount
($)
Maximum amount
(No GST credits)
($)
Maximum amount
(GST credits)
($)
Public benevolent institutions (PBIs) – not including hospitals, health promotion charities and rebatable employers 31,177 15,900.14 14,525.93
Public and non-profit hospitals 17,667 9,010.09 8,231.37