2018 FBT: Half Yearly Update

With the 2018 FBT year already more than half over, it is time to review some of the most significant areas of FBT changes over the period 1 April 2017 to 30 September 2017.

 

Draft Tax Ruling on employees’ travel expenses

The Commissioner has issued Draft Taxation Ruling TR 2017/D6 which sets out the ATO’s views on general principles for determining whether an employee can deduct travel expenses under s 8-1 of the ITAA 1997. When the final ruling is issued, it is proposed to apply both before and after its date of issue.

 

A travel expense is an expense relating to:

  • Transport by airline, train, car, bus or other vehicle, or
  • Accommodation, meal and incidental expenses of an employee when they travel away from home for work.

 

The draft ruling sets out general principals as well as particular issues relating to (ordinary home to work travel, special demands travel, co-existing work locations travel and relocation travel.

The ruling contains many examples to illustrate how to determine the deductibility of travel expenses in a range of situations.

 

FBT technical discussion paper on taxis

The ATO has issued a technical discussion paper TDP 2017/2 on the definition of “taxi” under the FBT Act. under s 58Z of the Act, taxi travel undertaken by an employee to or from work or due to illness is exempt. At present a “taxi” only covers vehicles licensed by the relevant state or territory to operate as a taxi. The ATO is reviewing this definition in light of the Uber B.V. v FC of T decision (which dealt with the definition of taxi in the context of GST).

 

New occupational clothing guidelines

The government has issued new approved occupational clothing guidelines, replacing the 2006 version. These set out the criteria that designs of non-compulsory uniforms must meet if the designs are to be entered on the Register of Approved Occupational Clothing which is maintained by AusIndustry. One of the ways to ensure that employee expenditure on uniforms is eligible as a tax deduction is for the design to be entered on this Register.

Draft ruling on employee remuneration trusts

The ATO has issued Draft Taxation Ruling TR 2017/D5 which sets its views on how the taxation laws apply to an employee remuneration trust (ERT) arrangement that operates outside of Div 83A of the ITAA 1997.

 

An ERT arrangement involves a trust being established to facilitate the provision of payments and/or other benefits to employees. The ruling considers the consequences for the employer, particularly when contributions will be deductible. It also deals with the consequences for employees in terms of when they may be assessed on contributions or deemed dividends.

 

The draft ruling replaces Draft Taxation Ruling TR 2014/D1. When the final ruling is issued, it is proposed to apply both before and after its date of issue.

 

 

FBT car parking threshold for 2017/18

The ATO released Taxation Determination TD 2017/14, which states that the car parking threshold for the FBT year commencing on 1 April 2017 is $8.66. This is up from $8.48 for the previous FBT.

 

ATO guidance withdrawn

The ATO has withdrawn numerous Tax Rulings, Determinations and Interpretative Decisions of relevance to FBT. These include:

  • ATO ID 2002/616 dealing with deductibility of accommodation expenses for a person who lives a long distance from their work place, and
  • ATO ID 2002/807 dealing with deductions on meal expenses while on overnight business travel.
  • ATO ID 2001/120 Fringe benefits tax “otherwise deductible’” rule
  • ATO ID 2010/178 Deductibility of income protection premiums.
  • ATO ID 2002/616 dealing with deductibility of accommodation expenses for a person who lives a long distance from their work place, and
  • ATO ID 2002/807 dealing with deductions on meal expenses while on overnight business travel.
  • Various Tax Determinations (TDs) setting out rates and thresholds for the 2012 FBT year
  • IT 112 Income tax: Deductibility of travelling expenses between residence and place of employment or business.
  • IT 113 Income tax: Computer consultant — travelling expenses between home and place of employment.
  • MT 2030 Fringe benefits tax: living-away-from-home allowance benefits.
  • TD 93/113 Income tax: are the costs incurred by teachers when travelling between their home and their regular school to attend Parent and Teacher meetings, sports and other school functions allowable as a deduction under subsection 51(1) of the Income Tax Assessment Act 1936?
  • TD 93/174 Income tax: does the receipt of a travel allowance automatically entitle an employee to a deduction for travel expenses under section 8-1of the Income Tax Assessment Act 1997?
  • TD 96/7 Fringe benefits tax: is fringe benefits tax (FBT) payable on meals and accommodation provided to employees who work at remote construction sites, where the accommodation is not the usual place of residence of the employee?

 

Class rulings issued

The ATO has issued numerous class rulings. I suggest you visit law.ato.gov.au to view the full list.

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