Fringe Benefit Tax (FBT)
is payable by the university in respect of fringe benefits
provided to its employees or their associates. There are several
different types of payments which give rise to a taxable fringe
benefit which are outlined below:
Entertainment Fringe benefits
Entertainment expenses incurred by the university on behalf
of its employees give rise to a taxable fringe benefit (S.38)
except in the following cases:
- Provision of food and drinks to be consumed
at the university's 'In-house dining facilities'.
In-house dining facility is defined under ITAA S.51AE(1)
as a canteen, dining room or similar facility located
in the premises of the university and operated wholly
or principally for providing food and drink on working
days to employees and not open to the public at any time.
Expenses incurred for food and drinks provided by the
university for its employees during normal working hours
(not being food or drink provided at a party reception
or other social function) at designated facilities within
the university's premises will not be subject to FBT.
- Provision of food and drinks at an eligible seminar
where staff participate.
Eligible seminar as defined under the ITAA S.51AE(1) means
a seminar which has a continuous duration of not less
than four hours but does not include a seminar where the
dominant purpose is to give, receive, and/or discuss information
relating to the business and/or to promote or advertise
the business or goods and services.
- Provision of food and drinks at an exempt training seminar
is exempt from FBT.
An exempt training seminar will be conducted on premises
that are not premises of the employer, and are premises
of a person whose business consists of or includes organising
seminars or making available premises for the purpose
of the conduct of seminars.
- Provision of food and drinks to an employee pursuant
to an industrial agreement relating to overtime.
- Provision of 'Minor Fringe Benefits' (S.58P).
Section 58P exempts benefits that satisfy a 'minor benefit'
test when the provision of entertainment to an employee
(1) is incidental to the provision of entertainment to
outsiders, and does not include a meal; or (2) the entertainment
is provided to the employee on eligible premises of the
university and solely as a means of recognising the special
achievements of the employee in a matter relating the
employment of the employee; and the notional taxable value
of the minor benefits in relation to the current year
of tax is small.
In order to account for entertainment expenses which create
a taxable fringe benefit, an entertainment expense form
will be completed by the department incurring the expenditure.
Costs will be allocated to:
Where an employee and other persons who are not employees
are entertained at the same time, total expenditure will
be apportioned over the total number of persons present
at each function on a pro rata basis.
Expense benefits
Expenses paid on behalf of employees which give rise to
taxable fringe benefits, include telephone subsidy, air-conditioning
subsidy and HECS payments.
The taxable value of an expense payment fringe benefit
may be reduced by the 'Otherwise Deductible' rule. The concept
of the rule is that the taxable value of a fringe benefit
may be reduced to the extent that only the employee's private
usage of the fringe benefit is taxed. Examples of expense
payment benefits which may be reduced are payments for courses
which are work related, ie. training seminars and conferences,
certain postgraduate courses which are not under HECS and
are undertaken by employees in relation to their work. Accordingly,
the payment for such courses on behalf of employees will
not attract FBT. A declaration will be obtained from the
employee to confirm such courses are undertaken in relation
to their work.
The 'Otherwise Deductible' rule does not apply to HECS.
Property fringe benefits
Gifts to employees by the university are considered as
property fringe benefits. The taxable value applicable is
the cost price of the property (gift) less any amount paid
by the employee.
Long service awards (in recognition of fifteen years or
more service) are exempt provided the value of the award
does not exceed a specified maximum amount. Where the period
of service is fifteen years, the specified maximum value
is $500. For service longer than fifteen years, the maximum
value will be increased by $50 per year. Where the value
of an award exceeds the relevant maximum value, no part
of the award is exempt.
Housing fringe benefits
A taxable fringe benefit arises in respect of housing provided
to employees where the rental charged to the employee is
less than the market rental value of the property owned
by the university. The taxable fringe benefit will be the
difference between the market rental value and the rent
paid by the staff member.
As an alternative to establishing the market value every
year, the taxable value for the second and subsequent years
may be based on the first year's market rental value, adjusted
by indexation. This applies for a maximum of nine consecutive
years.
The taxable fringe benefit for housing rented by the university
for staff will be the actual amount of rent paid or subsidised.
Motor vehicle fringe benefits
Motor vehicle fringe benefits liabilities of the university
will be determined on information supplied by the Transport
Department. Motor vehicles which are not garaged at the
University may create fringe benefit tax liabilities, and
all vehicles assigned to the senior executives of the university
will be subject to FBT.
The university motor vehicle fringe benefits liabilities
are calculated by using the statutory formula method. FBT
liabilities are on the 'Base Value' of each vehicle and
the annualised number of kilometres travelled by each vehicle.
The base value will be the actual cost of each vehicle plus
sales tax (which would have been paid if the university
was not exempted from sales tax). (Sales tax only applicable
if vehicle was purchased before 1 July 2000)
The opening and closing odometer readings of each vehicle
will be established to give the total kilometres travelled
during the relevant period, and the figure will be annualised
on a number-of-days basis. A relevant statutory percentage
as prescribed by the Tax Department will be applied.
The taxable value of each vehicle will be calculated based
on the base value, the relevant statutory percentage and
the period the vehicle is available during the tax period.
Private Travel
Where private travel is undertaken in conjunction with
travel on University business the employee will be responsible
for the payment of any Fringe Benefit Tax. This may arise
where a business trip is extended to incorporate recreation
leave.
