UTS provides Fringe Benefits to employees that are either exempt or concessionally taxed under the Fringe Benefits Tax Assessment Act 1986
UTS Fringe Benefits include:
- Pool Vehicles
- Travel, LAFH and Relocation
- Expense benefit,
- Meal Entertainment
- Entertainment FAQ's
- Minor Benefits
- Exempt Benefits
- Work Related Items
Current FBT rates applied to the above benefits can be referred to on the ATO website.
Some benefits listed above may be salary packaged to give a tax effective outcome to employees. For further information on salary packaging please contact staff services in HR.
A Car Fringe Benefit arises when a car owned or leased by an employer is made available for the private use of an employee or deemed to be available for the private use of an employee.
UTS offers it’s staff the opportunity to salary package a Motor Vehicle. UTS offers two types of motor vehicle leases, namely:
- Novated leases &
- Operating leases.
The cost of a vehicle to an employee’s package is a combination of FBT, leasing cost, petrol, repairs, insurance etc. The method of calculating FBT is called the statutory formula method.
The taxable value of the car fringe benefit is a percentage of the car's value. This percentage varies with the total distance travelled by the car during the FBT year (ending 31 March).
Taxable Value = (A x B x C/D) - E
A = the base value of the car
B = the statutory percentage
C = the number of days the car fringe benefit was provided
D = the number of days in the FBT year &
E = the amount (if any) of the employee contributions
The statutory percentage
This method has four levels for kilometres travelled. The more kilometres travelled, equals to a cheaper statutory formula tax rate being applied. The four kilometre rates are:
For all new leases the stat % of 20% will apply. For existing leases the transition will apply as per the below table.
Example of car benefit using statutory formula method
- the car is purchased by an employer for $30,000 (GST-inclusive) on 30th September 2003 and the car base value is $30,000;
- for the period 30 September 2003 to 31 March 2004 (ie. 183 days) the car is available for private use by the employee who travels 15,000 kms. The projected total kilometers for the full 2003-2004 FBT year would be 29,918km. The statutory percentage would be 11%
= base value x statutory % x no. of days car used / no of day in FBT year.
= $30,000 x 11% x 183/365
The overnight use of a UTS Pool Vehicle that is garaged at or near an employee's residence may attract Fringe Benefit Tax.
Information for the use and booking of pool vehicles can be found at http://www.fmu.uts.edu.au/campus/transport/vehicles-guidelines.html
It is inevitabl that employers will incur expenditure with respect to employees who are travelling, living-away-from-home(LAFH) or relocating with respect to their employment duties. Correct classification is crucial to calculate the correct FBT.
When is an Employee Travelling on Work?
Generally when an employee is away for a period not exceeding 21 days is considered as travelling. However, it is important to note that an employee who is away from home for more than 21 days is not automatically considered as living away from home (example - employees travelling on sabaticals). If in doubt as to what is considered as travelling, please contact Tax and Compliance, FSU.
When is an Employee Living Away from Home?
Generally, an employee will be considered to be living away from home when the factors below are satisfied;
- The employee has moved from their usual place of residence to a new location for work purpose only.
- The move is temporary and the employee intends to move back to their usual place of residence upon completion of the assignment
- The transfer is for a fixed term.
What is Living-Away-From-Home Allowance
A living-away-from-home allowance is an allowance paid by an employer to an employee to compensate for the additional expenses incurred and disadvantages (if any) suffered because the employee is required to live away from home in order to perform his or her duties of employment.
As per the budget announcement made on May 8 2012 The Living Away from Home Allowance will be available only in limited situations. In most circumstances the Living Away from Home Allowance will be treated under the Income Tax Regime as ordinary time earnings.
When has an employee relocated?
An employee has relocated from their usual place of residence when;
- The transfer is for an indefinite time period.
- The move to the new location is of a permanent nature
- The employee has applied for a permanent visa or Australian citizenship
- The employee has changed their details for electoral roll or passport purposes
An expense payment fringe benefit may arise in either of two ways.
- When an employer reimburses an employee for taxable expenses incurred by the employee, or
- When an employer pays a third party for taxable expenses incurred by an employee.
The taxable value of an expense payment fringe benefit is the amount of the reimbursement or payment made by the employer, reduced by the amount of:
- An employee contribution paid within the FBT year; and
- The expense payment fringe benefit that is subject to the “otherwise deductible” rule.
Travel expenses are exempt from FBT only when travel diary is maintained by the employee showing detailed activity taken while on approved travel. Travel Diary is required for overseas travel of more than 5 consecutive nights and for domestic travel of more than 5 consecutive nights and the purpose of the trip was NOT exclusively business.
Travel Diaries can be prepared in advanced and endorsed by the traveller upon return with any changes necessary.
Travel Diaries must be submitted to FSU. Failure to do so will attract FBT on the total cost of the travel and will be charged to the faculty/division.
A travel diary is not required, if the trip is approved by UTS but not paid by the University, however travel diaries are required even if UTS has paid only a portion of the travel expense.
A travel diary shows the nature of each work activity, where and when it took place, the duration of the activity and the date the entry was made.
Miscellaneous Tax Ruling MT2038 discusses the ATO requirements for a travel diary. Please refer to the ruling prior to completing the travel diary.
FBT is payable on meal entertainment (that is, food or drink, and accommodation and travel related thereto) provided to employees / spouses / partners / associates / former employees.
Meal Entertainment includes:-
- The provision of food or drink to employees and their associates that has the character of entertainment. The ATO considers business lunches & drinks, dinners, cocktail parties and staff social functions (if paid by UTS) to be subject to FBT. Functions that have alcohol are also subject to FBT.
- Hiring cost of venue, equipment, food, waiters etc associated to a particular entertainment event where food or drinks were provided. All these costs should be charged to one natural account and not separate accounts for hire, equiment, meal and so on.
Meal Entertainment is not:-
- The provision of a light meal (finger food etc) for example a working lunch (sandwiches and orange juice) on UTS premises, or a morning or afternoon tea. This is regarded by the ATO as sustenance and not meal entertainment.
From 1 April 2004, UTS uses the "actual method" for calculating meal entertainment. This method relies on a "per head" basis for calculating the FBT liability relating to employees / spouses / partners / associates.
The four factor to apply for meal entertainment are;
Factor to consider
Why the food/drink is provided
What is the Purpose?
food and drink provided for the purposes of refreshment or sustenance (i.e enable employees to complete the working day in comfort) does not generally have the character of meal entertainment; whereas
food and drink provided in a social situation, where the purpose is for employees to enjoy themselves (e.g. a dinner, evening drinks or a staff function), will have a character of meal entertainment.
What type of food/drink is being provided?
How elaborate is the meal?
the provision of morning and afternoon teas or light meals (eg. sandwiches, finger food, fresh fruit, soft drink or juice) on UTS premises does not generally have the character of entertainment; whereas
a three course meal provided during a working lunch has a character of entertainment.
When the food/drink is provided?
Food and drink provided during work time, overtime or while on business travel is less likely to be defined as meal entertainment. Food and drink is maily provided for work-related purpose and not entertainment.
In contrast, food and drink provided outside of work time (eg social function) will be meal entertainment.
Where the food/drink is provided?
If food and drink is provided at UTS premises and for work-related purpose will not be meal entertainment.
Food and drink provided off the UTS premises is more like to be Meal entertainment (eg. food and drink provided in a function room, restaurant or cafe).
Please refer to the table of major events and the flowchart to guide you in classifying common events that are held in the University.
The meal entertainment form must be attached to all payment requests that include Meal Entertainment provided to customers and staff to apportion the FBT liability. The form is not required if the meal entertainment is provided to UTS staff only. The full expense will attract FBT.
Food provided while travelling is not entertainment, as the meal (paid by UTS) provided is sustenance. If there is an accompanying spouse / partner / associate and UTS pays for meals, FBT applies.
The ATO's interpretation of entertainment by way of food and drink for FBT purposes is published in Tax Ruling 97/17 and addendum TR 97/17A.
Food consumed at an employer paid eligible seminar or conference is not subject to FBT. That is, a conference, convention, lecture, etc. of at least four hours duration.
The following are not eligible seminars
- Conducting normal business discussions; or
- Meeting for the purpose of advertising the goods or services of a particular business; or
- Meeting for the dominant purpose of providing entertainment.
If staff are required to attend Alumni and Graduation dinners, FBT does not apply as the "otherwise deductible" rule applies. That is, the expense would be otherwise income tax deductible for the staff member, if they were required by their employer to attend the function.
UTS is an income tax exempt entity. The ATO does not permit a tax-exempt body to have exempt minor entertainment benefits. Consequently, UTS funded Christmas parties are subject to FBT.
Exempt UTS provided fringe benefits include:
- Car parking,
- Childcare, at Blackfriars and the Kuring-Gai Campus. Magic Pudding is excluded.
Car parking benefit is an exempt benefit for UTS under section 58G (2), (3) of the FBT Act as UTS is a non-profit organisation.
Child care facilities provided on the employer's business premises is an exempt fringe benefit under the section 35.580 of the FBT Act and therefore also provides a salary sacrifice opportunity.
Minor benefit exemption can only apply to a benefit that is provided in respect of an employee's employment where the value of the benefit is less than $300 (GST inc) as of 1 April 2007. Please complete the declaration form for gifts with the value of $300(gst inc) and over and attach it to the invoice. (FBT Tip: If the value of the gift is => than $300(GST inc), request staff members to make contributions towards the gift to bring the value = or less than $299.00 to qualify FBT exemption).
However, the threshold is not the only criteria to be satisfied to apply minor benefit exemption. There are other criteria and conditions that need to be satisfied before the benefit provided qualifies for FBT exemption under S.58P.
Factors to consider for minor benefit exemption are;
- Frequency/regularity with which similar or identical benefits are provided. - If similar or identical benefits are provided to the employee more frequently and regularly, it is less likely to qualify for minor benefit exemption.
- Aggregate value of the minor benefit and any associated benefits - The greater the aggregate value of the benefits, it is less likely the minor benefit exemption will apply.
Associated benefits are basically those benefits that are similar or identical to the minor benefit provided.
- Difficulty in valuing the minor benefit and any associated benefits - The more difficult it is to practically value the minor benefit and any associated benefits, it is more likely the minor benefit exemption will apply.
- Circumstances in which the minor benefit and any associated benefits were provided - If the benefit is provided as a result of an unexpected contingency (eg unexpected overtime) it is more likely the minor benefit exemption will apply.
NOTE: Benefits provided to an employee principally as a reward for services rendered is less likely to qualify for minor benfit exemption.
Certain benefits are exempt from FBT. Work-related items under S.58X is one of the most popular FBT exemptions available to the employer.
Following items are generally FBT exempt;
- An item of computer software.
- Calculator, a tool of trade, briefcase etc
- Protective clothing if required for the employee's employment.
- Subscription and periodicals
Work related Items are FBT exempt only when it is used predominantly for work purpose. This includes laptop computers, Mobile phones, PDA etc. For the exemption to apply staff member must complete the declaration form and submit it to tax and insurance section. Failure to do so would attract FBTand will be charged to the faculty/division.
Importance of Declarations
Declarations are required to reduce the amount of FBT paid by the University. Declarations are required for:
- Motor vehicles odometer reading; this declaration is required at the end of the FBT year (31 March)
- Gifts to staff equal to or greater than $300 (GST Inclusive)
- Expense Benefit declaration (eg. when UTS reimburses an employee or pays for a taxable benefit) are required when the benefit is received.
- FBT Declaration form for work related items (mobile phone/internet) is required when the item is received.
Completed Declarations should be forwarded to Tax in the Financial Services Unit. Email: Tax@uts.edu.au
Employers are required to complete the following process where they provide fringe benefits to employees:
- Calculate the FBT payable in relation to fringe benefits provided to employees during the FBT year;
- Remit the fringe benefits tax payable with respect to the benefits provided to employees during the FBT year; and
- Record the grossed-up value of reportable fringe benefits on an employee’s payment summary where the combined total of those reportable fringe benefits is more than $2,000.
It should be noted that where the fringe benefit has no taxable value (e.g., due to employee contributions), or where the fringe benefit is exempt from FBT (e.g., a laptop computer), the fringe benefit does not need to be reported on the employee’s payment summary.
The reportable fringe benefits amount is the total of the grossed-up value of the individual fringe benefit amount. The grossed-up amount is, calculated by multiplying the reportable fringe benefits amount by 1.8692.
For additional information please refer to the ATO document titled - Reportable Fringe Benefits - Facts for Employees.
Frequently Asked FBT Questions ( FAQs)
Answers to UTS relevant Frequently Asked Questions have been prepared.
If you have any FBT questions please email email@example.com