Fringe Benefits Tax key updates

Car Parking Fringe Benefits – Effective 1 April 2022

The ATO has recently confirmed that the draft taxation ruling TR 2019/D5 will not be finalised as effective from 1 April 2021 after all. The long-awaited finalisation of the ruling is now planned to happen by mid-June 2021, and will come into effect from 1 April 2022.

Recap on how this affects you

The draft ruling effectively extends the definition of a “commercial car parking station” compared to the previous ATO interpretation. Basically, as long as a permanent car parking facility offers all-day parking and is run for profit, this will constitute a “commercial parking station” and may trigger car parking fringe benefits for employers within 1km.

The big change this brings is for facilities that charge penalty rates for all-day parking, such as many hospitals, shopping centres, etc. Such facilities may be well outside the CBD and cause FBT to arise on nearby employee parking that was not subject to FBT previously.

Employers outside the CBD should consider the following steps:

1. Check whether there are any commercial parking stations within 1km of your employees’ parking that charge more than the daily threshold rate ($9.15 in 2020/21); and
2. If so, consider obtaining a market valuation for your employee parking, which may be well less than the lowest fee charged within 1km, and thus minimise any FBT obligation.

Grant Thornton can assist with both these steps, so please get in touch.

Salary Packaged Meal Entertainment

For the 2021 FBT year - and due to COVID-19 and lengthy lockdown measures imposed in various states – the ATO took a practical approach and effectively allowed takeaway and home delivered meals to be salary packaged as meal entertainment by employees in the not-for-profit sector. The approach was to state that they would not be reviewing supporting documentation for these benefits. Fundamentally, however, the expenditure should still have constituted ‘entertainment’ in order to qualify for salary packaging.

From 1 April 2021, due to the easing of restrictions relating to COVID-19 in the various states, the ATO is not extending the relaxing of these rules. This means supporting documentation for salary packaging of meal entertainment may be reviewed in detail by the ATO.

How this affects you

Employers will need to make a call on what they permit their employees to salary package under the meal entertainment category going forward. Many will likely revert back to allowing expenses from dining-in only. This is not a legal requirement, but a measure that was widely used previously to help ensure the expenses being salary packaged were in fact entertainment.

If takeaway and home delivered meals are to continue to be permitted in salary packaging arrangements, then we suggest there should be some additional steps taken to ensure the meals qualify as entertainment.

For further information, please contact your usual Grant Thornton advisor.