Certain Fringe benefits tax (FBT) exemptions will now apply to businesses with turnovers between $10 million and $50 million. Retraining of redundant and redeployed employees will also be exempt from FBT. Record-keeping requirements may also be reduced in future.
Expansion of exemptions for small business entities
The Government has announced that the definition of small business entity will be expanded to apply to businesses with aggregated turnover up to $50 million, thus enabling more businesses to access FBT exemptions for certain car parking benefits and multiple portable electronic devices provided to employees.
The change to car parking benefits will be a significant concession for many employers currently providing car parking benefits in inner city areas, particularly given employee concerns about the use of public transport in the current environment. Access to the exemption will still be subject to other considerations, including that the benefit cannot be provided in a commercial car parking station. The changes will apply from 1 April 2021.
For portable electronic devices, the current FBT exemption is available to all employers, but is limited to the provision of one similar portable electronic device to an employee in each FBT year, provided the device is primarily used in the employee’s employment. The expanded definition of small business entity means that more employers will now be able to provide multiple portable electronic devices to their employees in any given FBT year. Given that the exemption will still require each device to be provided primarily for use in the employee’s employment, it is unlikely to be a significant concession.
Retraining of redundant and redeployed workers
The Government has announced that it will introduce an exemption enabling employers to provide retraining for redundant or redeployed employees with effect from the date of announcement (6 October 2020). Currently, an exemption from FBT is only available for training provided to employees related to their current position. The exemption will not apply to any salary packaging arrangements.
Given the significant redundancies and redeployments as a result of COVID-19, this exemption will provide opportunities for employees to continue employment in restructured businesses or seek employment in other industries.
The Government acknowledges that the current rules regarding self–education expenses operate as a disincentive to an individual retraining and reskilling. As such, it proposes to consult on allowing individuals to deduct expenses incurred personally to retrain and reskill to support their future employment. Pitcher Partners welcomes these changes and proposals.
Reducing record-keeping requirements
The Government has announced that it will provide the Commissioner of Taxation with the power to allow employers to rely on existing corporate records rather than employee declarations and other records which would normally be required to finalise FBT returns. This measure will come into effect from the start of the first FBT year after the date of Royal Assent of the enabling legislation.
Whilst this measure is designed to reduce the compliance burden on employers, it will be entirely at the discretion of the Commissioner to determine the adequate alternative records. It will be important to understand what corporate records the Commissioner may accept in lieu of the employee declarations ordinarily required.