Payroll – What’s on the employment tax horizon?

With significant updates on the horizon, including the cessation of the FBT exemption for plug-in hybrid electric vehicles (PHEVs), the introduction of payday superannuation rules, and the fast-approaching end of the FBT year, staying ahead of these changes is crucial.

Plug-in hybrid electric vehicles – FBT exemption ending

The FBT exemption available for PHEVs ceases as of 1 April 2025, subject to some transitional rules. There has been a lot of confusion about how the transitional rules apply. In order to qualify for FBT exemption after 31 March 2025, the following criteria will need to be met:

• The car qualified for FBT exemption prior to 1 April 2025
• The car was available for use prior to 1 April 2025
• A financially binding commitment regarding the provision of the use of the car was in place prior to 1 April 2025 and remains in place and unchanged. 

Whilst a financially binding commitment might be in place prior to 1 April 2025, if the car has not been available for private use before this time, the FBT exemption will not apply. This means that PHEVs ordered prior to 1 April 2025 but not delivered until after that time will not qualify for FBT exemption. See our further information regarding the exemption phase out here.

Payday superannuation 

The new payday superannuation rules are slated to be applicable from 1 July 2026, although the legislation has not been released yet – even in draft. Whilst design rules were released in late 2024 (see our summary here), there are still many unanswered questions regarding the specific details. 

Employers should ensure they are on top of superannuation liabilities to date in readiness for the change. Some typical areas where we find errors are:

• Apportioning the annual superannuation amount applicable to the maximum earnings base across fortnightly salaries. This results in underpayments in the quarters with less pay periods.
• On-call payments not being split between payments made to ‘be on call’ and payments made only when ‘called out’. 
• Workers’ compensation payments not being split between payments made when employees are working (such as on reduced hours or reduced duties) and payments made while employees are off work. 

FBT year end

As we approach the end of the FBT year, some common compliance issues to consider are:

• Motor vehicles
  • Do you have evidence of restrictions on private use for exempt vehicles?
  • Have you maintained logbooks where needed?
• Car parking 
  • Do you have a liability on your locations outside the CBD?
  • Are you using the right/most efficient valuation?
• Entertainment
  • Have you automated the extraction of sustenance from your entertainment data?
  • Are any employees working at entertainment events, rather than being entertained?
• Travel
  • Have you made use of all the various tax concessions for employees who move around?
• Tax governance
  • Have you included FBT and other employment taxes in your tax governance policies and protocols?

Stay ahead of the changes and ensure your payroll compliance. Register for our upcoming webinar on 4 March 2025 to gain deeper insights into the FBT exemption phase out, payday superannuation rules, and year end compliance strategies. Don’t miss this opportunity to get expert advice and practical tips —secure your spot today.