The 2023 Fringe Benefits Tax (FBT) year ends on 31 March 2023. As an employer, if you provide particular benefits to your employees you may be liable to pay FBT and required to lodge a FBT return. An internal review considering FBT implications is always good at this time of year and you should include the following:
The ATO has highlighted areas of FBT non-compliance which it will target this year:
A number of changes have been introduced for the 2023 FBT return that will affect the majority of employers. These changes relate to some of the most frequent provided fringe benefits offered to employees. The most important changes to note are:
Fringe benefits provided to independent contractors:
A recent High Court decision has rejected the common law approach of who constitutes an employee (based on a multi-factor approach) and replaced it with the legal rights and obligations specified within the written contract. As a result, the ATO has released Tax Ruling 2022/D3 that provides guidance on who is an employee for PAYG and superannuation purposes. This interpretation of an employee also extends to Fringe Benefits Tax obligations, therefore important to review contracts currently in place to determine whether independent contractors fall under the definition of an employee.
Changes to car parking fringe benefits
In June 2021, the ATO released Tax Ruling 2021/2 widening the definition of what constitutes a commercial car parking station. Previously, ‘special purpose parking facilities’ (such as those whose fee structure is to encourage short term parking only) were not considered to be a commercial parking station for the purposes of the car parking fringe benefit. However, under Tax Ruling 2021/2, the ATO now views a special purpose car parking facility as a commercial parking station. Commencing from 1 April 2022, employers who provide car parking fringe benefits to employees that is located within a 1 km radius of a commercial parking station (including special purpose parking facilities) will be exposed to an FBT liability.
Exemption for electric vehicles
Introduction of an FBT exemption for electric vehicles purchased on or after 1 July 2022, where the purchase price of the vehicle falls below the luxury car tax threshold for fuel efficient cars, which is currently $84,916. The vehicles that will be eligible are battery electric vehicle, hydrogen fuel cell electric vehicles and plug in hybrid electric vehicles.
AFS and our team of specialists can make your job easier by helping you prepare and lodge your FBT return. Please call us on 03 5443 0344