The fringe benefits tax (FBT) year ends on 31 March 2021. However this year, in addition to the normal reporting you need to do at this time of year, you also need to consider what impact COVID-19 may have had on the status of employee benefits this past year.
If you’ve provided benefits to your employees in the past 12 months, you’ll need to:
- work out which of these benefits will attract FBT, and
- lodge your FBT return by 21 May 2021
As in past years, examples of fringe benefits include:
- private use of work cars
- entertainment (e.g. concert tickets)
- reimbursement of employees’ expenses (e.g. school fees)
- salary sacrifice arrangements.
The big difference this year will be the many workplace changes that have occurred as a result of COVID-19. You may have found yourself providing different benefits to those you usually provide – and these may be exempt from FBT.
Generally, you still don’t need to pay FBT for:
- items provided to employees to enable them to work from home (e.g. laptop or portable device)
- emergency accommodation, food and transport
- emergency health care.
So what may be different for your business this year?
Working from home
You may have provided employees with items to allow them to work from home (or from another location) due to COVID-19.
Some items will usually be exempt from FBT if they are primarily used by your employees for work. The items include:
- portable printers
- other electronic devices.
Also, the minor benefits exemption or the otherwise deductible rule may apply to exempt other work from home benefits such as if you:
- allowed your employee to use a monitor, mouse or keyboard they otherwise use in the workplace, or
- provided them with stationery or computer consumables or paid for their phone and internet access.
The minor benefits exemption may apply for minor, infrequent and irregular benefits costing under $300. The otherwise deductible rule allows the benefits you provided to your employee to be exempt from FBT if they are the type of expense your employee would have been able to claim in their tax return if they had paid for them and not been reimbursed..
Cars, Log Books and FBT reporting in 2021
All businesses that provide cars to employees or use of cars to employees need to be mindful of potential changes to FBT reporting if COVID-19 has impacted driving patterns AND if you have an existing logbook.
A log book usually only needs to be redone every five years (or when the business use changes significantly). Where you’re already using the operating cost method, you may have an existing logbook in place. You can still rely on this logbook, despite changes in driving patterns due to COVID-19.
However, where your driving patterns and business-use percentage have been impacted by COVID-19, you also need to make a reasonable estimate of the percentage of business use of the car, taking into account logbooks, odometer records and any changes in the pattern of business use throughout the year. This may provide a more appropriate base to estimate the business use of the car.
Some examples to help you see how this works in practice
Example 1 – FBT year ended 31 March 2020 – new logbook not kept
An employer uses the operating cost method to value their car fringe benefits. They kept a logbook in the FBT year ended 31 March 2018.
For the FBT year ended 31 March 2020, there is no requirement for the employer to keep a new logbook.
The employees’ driving patterns were not impacted significantly by COVID-19 across the 2020 FBT year, with the only impact occurring in March 2020, so they decide not to keep a new logbook.
They use the existing logbook, odometer records, employee fuel card records, plus client records to estimate the business use percentage to use for this year (providing a more accurate representation of business use to use this year than the old log book).
Example 2 – FBT year ended 31 March 2021 – new logbook kept
An employer uses the operating cost method to value their car fringe benefits, and kept a logbook in the FBT year ended 31 March 2018.
For the FBT year ended 31 March 2021, there is no requirement for the employer to keep a logbook (existing logbook is less than five years old).
However, employee driving patterns have been significantly impacted by COVID-19, and so the employer chooses to keep a new logbook as it provides a more accurate base to estimate the business use of the car. Odometer records of the total kilometres travelled during the logbook period and during the FBT year are also kept.
FBT considerations around accommodation, food and transport during COVID-19
You will not have to pay FBT if you provide emergency accommodation, food, transport or other assistance to an employee if:
- the benefit is emergency assistance to provide immediate relief, and
- the employee was, or is at risk of being, adversely affected by COVID-19.
In the context of COVID-19, the FBT emergency assistance exemption applies if you provide emergency accommodation, food, transport or other assistance to an affected employee. For example:
- expenses incurred relocating an employee, including paying for flights home
- expenses incurred for food and temporary accommodation if an employee cannot travel due to lock-down restrictions
- benefits provided that allow an employee to self-isolate or quarantine
- transporting or paying for an employee’s transport expenses including car hire and transport to temporary accommodation.
Have you got an FBT question?
We’ll be sending out the annual FBT Questionnaire to our employer clients at the end of the FBT year. If you have a company car AND are using the log book method please let us know if your car wasn’t used during the official lockdown period. If you have any questions or need any assistance with completing your FBT details this year, please contact our team.
COVID-19 has meant quite a few changes to the tax system. Our team is here to help you navigate changes that may impact your business.