FBT Update 2013

• FBT Seminars: www.fbtseminars.com.au • Car Parking FBT Rates: www.carparkingFBTrates.com.au • FBT Return review options: www.fbtreturn.com.au

A Time of Change & ATO Focus. Salary Packaging - Paul Mather

FBT Update 2013

Understanding FBT

FBT Update & Salary Packaging

Liability limited by a scheme approved under Professional Standards Legislation

1. Has FBT ever had a greater profile? a) Public figures in benefit scandals b) LAFHA changes c) Removal of concession for in-house benefits d) Change in valuation of airline benefits e) Cars in transition f) ATO & OSR audits increase g) Non profit tax / FBT reform?

2. Salary Packaging

a) Introducing Salary Guru b) Understanding the full extent of salary packaging

Understanding FBT

LAFH changes

Liability limited by a scheme approved under Professional Standards Legislation

Commenced 1 October 2012: 1.Required to maintain a home in Australia whilst living away from it – home must always be available (ie can’t sublet) 2.12 month cap on duration at any one location The above restrictions do not apply to FIFO/DIDO employees and those employees who qualify for the transition Transitional arrangements from 1 October 2012: 1.Must have LAFH arrangement in place on 8 May 2012 2.Permanent residents, LAFH extended to 30 June 2014 (no 12 month cap or requirement to maintain a home) 3.Temporary residents, LAFH extended to 30 June 2014 but must maintain a home in Australia

Understanding FBT

LAFH changes

Liability limited by a scheme approved under Professional Standards Legislation

From 1 October 2012 increased substantiation: 1.Accommodation – rental agreement + receipts / evidence of payment 2.Food – if amount is greater than ATO reasonable limits, then must substantiate in full or excess subject to FBT (statutory food amounts also subject to FBT) 3.4 different declarations Substantiation applies to all LAFH situations including: 1.LAFH who qualify for transition 2.FIFO / DIDO

Understanding FBT

LAFH transition

Liability limited by a scheme approved under Professional Standards Legislation

Taking stock of “mobile” employees 1. Transition – permanent residents with LAFH arrangements in place prior to May 2012 2.Cashing out – can we cash out a LAFHA? 3. The substance of the arrangement is travel 4. FIFO / DIDO concession 5. Permanent relocations

Understanding FBT

Preparing the 2013 FBT Return - LAFHA

Liability limited by a scheme approved under Professional Standards Legislation

1. Determine true LAFHA’s v FIFO / DIDO v Travel v Permanent Relocation

2. LAFHA’s & FIFO / DIDO a) Substantiate accommodation b) Substantiate food in full where the weekly amount is

above the ATO reasonable amounts or pay FBT on excess and statutory food amounts?

c) Substantiation includes rental agreements, invoices / receipts, proof of payment

d) Employee declaration may suffice e) Employer or employee to retain substantiation for 5

years? 3. Manipulating the payroll data 4. Family groupings

Understanding FBT

2013 FBT Return – LAFH declarations?

Liability limited by a scheme approved under Professional Standards Legislation

ATO Declaration

Declaration applicable to

Employees who qualified for the

transition

FIFO / DIDO employees

Employees required to maintain a home

Employees who only received LAFHA prior

to 1 October 2012

Standard LAFH Declaration YES YES (but only if

LAFHA received prior to 1 October)

YES (but only if LAFHA received

prior to 1 October)

YES

Fly-in fly-out or Drive-in drive-out Declaration

NO YES NO NO

Employee related expenses Declaration

YES YES YES NO

Maintain a home in Australia Declaration

NO NO YES NO

Additional information Declaration (not ATO)

YES YES YES YES

Maximum number of declarations required

3 4 4 2

Understanding FBT

LAFH strategies

Liability limited by a scheme approved under Professional Standards Legislation

In place of LAFHA 1.Education fees + uniforms + books 2.Home Leave – 50% concession 3.Business travel? Continuing LAFHA: 1.Provide directly or reimbursement basis 2.Exclude Statutory food amounts Permanent relocation:

a) Temporary accommodation b) Incidental costs of sale & purchase

Temporary relocation – does the exemption for “relocation transport” includes temporary accommodation???

Understanding FBT

Food from 1 April 2013

Liability limited by a scheme approved under Professional Standards Legislation

ATO release Tax Determination 27 February 1.Domestic food rate structure similar to prior years 2.Reasonable amount reduced to $233 per week for a single adult 3.$117 each additional adult and $59 each child Continuing LAFHA: 1.Up to 31 March 2013, single adult rate is $250 per week 2.Opportunity to grandfather that rate after 31 March 2013 if contract refers to annual ATO rates. Subject to no material change in contract

www.carparkingFBTrates.com.au

Car Parking & FBT

FBT Update 2013

Understanding FBT

FBT & Car Parking – we can help you?

Liability limited by a scheme approved under Professional Standards Legislation

Do you have a liability to FBT on car parking? 1.Do you provide parking to your employees?

a) Owned Parking – on premises b) Owned Parking – off premises c) Leased Parking – on premises (in employers name*) d) Leased Parking – off premises (in employers name*) e) Otherwise available

2.Is there a commercial parking station within a 1km radius that charges above the daily threshold of $7.83 on 1 April 2012? * If not in employers name, then expense payment benefit

Understanding FBT

FBT & Car Parking – we can help you?

Liability limited by a scheme approved under Professional Standards Legislation

Do you have a liability to FBT on car parking? 3.If YES to 2 above, obtain the lowest daily rate within a 1km radius at 1 April 2012*; and 4.Obtain the lowest daily rate within a 1km radius at 31 March 2013*; and 5.Confirm the no. of spaces and beginning & end date; and 6. Confirm the number of days a benefit was provided or apply the 228 day statutory method * All day rate for a Commercial parking station

Understanding FBT

FBT & Car Parking – What you get

Liability limited by a scheme approved under Professional Standards Legislation

Access to Australia’s largest database of car parking rates 1.Report signed off by a Registered Tax Agent 2.Easy to use format for FBT return preparation 3.Quick turn around 4.Competitive pricing – we will beat any written quote by 15% Saves you time and all the hassle Saves you money and reduces your tax risk If you think you’ve paid too much FBT in the past – let us organise a FBT refund for you

Understanding FBT

FBT Returns – common oversights

Liability limited by a scheme approved under Professional Standards Legislation

Frequently overlooked benefits 1.PR costs – application + consulting fee 2.Spouse / family travel 3.Meals provided to non travelling employees 4.Meals provided to non travelling clients 5.Meals provided to non travelling spouses (incl. clients) 6.Health insurance 7.Taxi from “non place of work” to home 8.Visa renewals 9.LAFHA Food – statutory amounts 10.NEW FOR 2013 – Temporary Accommodation GST & Income Tax issues with 3, 4, 5 & 7

Understanding FBT

ATO get serious

Liability limited by a scheme approved under Professional Standards Legislation

Audit activity 1.5,000 PAYG audits 2.400 audits – 34% outside FBT system 3.10,000 education letters – 3% registering for first time 4.Encourage voluntary disclosure 5.Tax agent focus The future: 1.Cars 62% of revenue – increased data matching 2.FBT education with registration / glove box 3.A new form of FBT audit: Short & Sharp 4.Apply penalties more firmly 5.Falsified logbooks 6.LAFHA audits 12 months away

Salary Packaging

The total cost of taxable benefits

What is the total cost of a $1,100 taxable fringe benefit? ►FBT – $1,056 ►Payroll Tax – $113 ►Workers Compensation – $103 ►Benefit acquisition (less GST) - $1,000 Total cost = $2,272 = no good for salary packaging!

Understanding FBT

Introducing PACKAGING by SALARY GURU

Liability limited by a scheme approved under Professional Standards Legislation

We are different!

A.No monthly fees for anyone

B.Free written policy documents

C.Free education & training

D.Efficient technology based solution

How we deliver the best solution

A.We offer all fringe benefits to the full extent of the FBT law

B.Owned & operated by FBT qualified tax experts

C.No client too big or too small

Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Cars

Liability limited by a scheme approved under Professional Standards Legislation

1.Cars – Novated leases

I. using statutory formula method II. operating cost (Log Book) method III. pre tax or post tax basis

2.Cars – Utility vehicles and tool of trade 3.Cars – Associate leasing

Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Car Parking

Liability limited by a scheme approved under Professional Standards Legislation

1.Car Parking – Leasing 2.Car Parking – Owned 3.Car Parking – Adhoc 4.Car Parking – Prepaid 5.Car Parking – Pre-tax & Post-tax basis 6.Car Parking – Fly in/Fly out

Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

LAFHA, Relocation & Travel

Liability limited by a scheme approved under Professional Standards Legislation

1.Airline Lounge Memberships 2.Remote Area Benefits 3.LAFHA – Accommodation and Food 4.Relocation Costs 5.Temporary Accommodation 6.Home Leave 7.School Fees (Temporary visa holders) 8.Sale & Purchase of Home - Incidental Costs including Stamp Duty, Legals & Advertising 9.Leasing of Household Goods 10.Taxi Travel (Home to work & work to home)

Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Lifestyle & Family

Liability limited by a scheme approved under Professional Standards Legislation

1.Superannuation 2.In-house Childcare 3.In-house Recreational Facilities 4.Taxi Travel (Home to work & work to home) 5.Public Transport 6.Annual Travel Pass (Post tax) 7.Income Protection Insurance 8.Health services 9.In-house Benefits – Goods and Services (Post tax basis) Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Gadgets

Liability limited by a scheme approved under Professional Standards Legislation

1.Notebook Computers 2.Smart Phones 3.Tablets including iPad 4.PDA's 5.Calculators 6.Computer Software Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Work Related

Liability limited by a scheme approved under Professional Standards Legislation

1.Professional memberships 2.Subscriptions 3.Newspapers, magazines, journals 4.Self education 5.Home Office Expenses 6.Development Travel 7.Work Related Equipment 8.Tools 9.Uniforms Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

Not for profits

Liability limited by a scheme approved under Professional Standards Legislation

In addition to all the previous benefits: 1.Wedding & Event Food and Drink costs 2.Wedding & Event Function hire 3.Recreational Travel 4.Credit cards 5.Mortgage & rental 6.Access to specific exemptions 7.Access to specific rebates Powered by FBT Solutions – FBT & Salary Packaging is what we do!

Understanding FBT

What’s coming up….

Liability limited by a scheme approved under Professional Standards Legislation

• 2013 Salary Packaging Essentials Seminars Sydney – Wednesday 29 May Melbourne – Date TBC Brisbane – Date TBC

• Car parking FBT rates for 2013 & retrospective refunds

Australia wide, Representative, Tax Agent sign off

• FBT Returns and payments due 21 May or Tax Agent / ATO extension

• National Accounts Payable Day – Tuesday 1 October 2013

• Managing Employee Expenses, Entertainment & Travel Seminars

Practical training for HR, Finance, Accounts & Tax teams

NATIONAL ACCOUNTS PAYABLE DAY 2013

Liability limited by a scheme approved under Professional Standards Legislation

Time to nominate – recognise & reward! Nominations close Friday 6 September

www.nationalapday.com.au Proudly sponsored by Salary Guru

www.salaryguru.com.au

• National Awards for Best Individual AP person & Best AP team

• Runner up Awards in each category • All winners receive a trophy, prizes

& certificates

NEED AN IPAD?

Complete the feedback form for your chance to win a Mini iPad – winner drawn on 31

March 2013

Thank you for attending