1. Governing Policy and Legislation
1.1 Under Australian taxation law, Fringe Benefits Tax (FBT) is payable by the University if the private portion of travel combined with business travel is deemed to be more than incidental.
1.2 These procedures must be read in conjunction with the Policy on Travel, Accommodation and Subsistence.
2.1 Staff may seek approval to combine private travel with approved University business travel, subject to compliance with relevant University requirements which aim to ensure that the University's FBT liability is reduced to zero in cases where the private component of the travel is more than incidental. The purpose of these procedures is to set out these requirements.
Business Activities: are activities directly relating to purpose of the University business travel where University business (e.g. such as attendance at a meeting, attendance at a conference, field research or giving a lecture) is undertaken. Working on University business activities that are not related to the reason for University business travel are excluded eg working on projects not related to the travel or responding to general e-mails are excluded from business days for the purpose of these procedures. Business activities also include travel days (except travel days solely for private purposes) and days between business activities where it is impracticable to return to the University.
Business Days: are days where University business travel activities are undertaken for at least four hours (excluding breaks). Business days include travel days to arrive at a destination to transact University business for the purpose of the travel and to return from the business location. Business days do not include days when any personal leave (including but not limited to annual leave, long service leave and leave without pay) is taken. Weekends and public holidays immediately between two business days are also considered business days.
Employee: for fringe benefits tax purposes means a University employee which includes academic staff, professional staff and casual staff but does not include students. Former staff may also be considered to be employees for fringe benefits tax purposes. Under Australian taxation law this also includes associates of employees such as family members.
Fringe Benefits Tax (FBT): this is a tax imposed on employers for private benefits provided to employees and associates of employees. This tax is reduced to zero when the employee or associated pays for the private benefit. Under Australian taxation law, non incidental private travel combined with business travel is deemed to be a private benefit, even if the employer incurs no additional costs.
For example, a staff member is required to travel to London for one week of University business, then takes two weeks leave to lengthen their stay in London and pays all the additional costs incurred such as accommodation and meal costs. In this case FBT would still be levied on two thirds of the flight costs, notwithstanding that the University would have had to pay that cost anyway.
Incidental Travel: refers to travel where the predominant purpose is clearly for University business purposes and the private travel component is secondary, that is, where the private travel (in days) does not exceed 40% of the total travel.
Minimal University Work: generally means less than 4 hours (excluding breaks) of business activities in any given day.
Private Days: of a trip refers to the days when an employee is undertaking no or minimal business activities relating to the business purposes of the travel. For the purposes of these procedures, private days include weekends, public holidays and any other days where no or minimal University work is undertaken, other than those days classed as Incidental Travel above. The terms 'Private Travel' and 'Private Component' are used interchangeably in these procedures.
Travel Days: are the reasonable number of days taken to travel directly to and from the work destination without taking into consideration any private arrangements. Travel days would also include a rest day taken directly after an overnight economy flight.
4.1 In cases where a staff member is permitted to combine private travel with University business travel, the staff member must pay for the costs associated with the private travel.
4.2 When the private component of the travel exceeds 40% of the overall travel, the private component of the trip will be considered to be more than incidental. In such cases the cost of the travel (including but not limited to flight costs) will be apportioned between the two purposes. The method of apportionment is to use the relative proportion of business activities (in days) and the private component (in days). The staff member must pay for all of the private component of the travel to ensure that the University's FBT liability is reduced to zero.
4.3 The payment relating to the private component of the travel must be made from after tax personal funds. The payment cannot be from any University funds, including consulting funds.
4.4 When private travel is combined with travel for University business, any leave to be taken during the private portion of the travel must be approved (in the Employee Self-Service System) prior to undertaking the travel.
4.5 The Director, Financial Services is responsible for ensuring compliance with FBT related requirements. Compliance checks will be undertaken to ensure that procedures relating to combining business and private travel are being properly implemented.
4.6 In accordance with the Policy on Travel, Accommodation and Subsistence, staff members authorising University travel must be satisfied that the University business travel constitutes an appropriate expenditure of University funds.
4.7 In order to comply with Australian taxation law, employees, undertaking University travel must maintain a travel diary if travelling outside Australia or when combining business and private travel when travelling within Australia.
4.8 Where private travel is combined with travel for University business and the private travel is deemed to be more than incidental (see 4.2 above), a draft travel diary must be prepared and the private component to be paid by the staff determined, prior to finalising the travel arrangements.
4.9 The private component of the proposed travel can be calculated using the template and examples provided on the University's website at http://www.flinders.edu.au/finance/tax-information/tax-information_home.cfm. In instances where there is doubt as to whether an activity should be classified as business or private, the activity should be classified as being of a private nature. For unusual circumstances the staff member should contact the Tax Manager for advice (email@example.com)
4.10 The final travel diary, along with a copy of the itinerary or other relevant documents (e.g. conference agenda) must be completed and submitted within 14 calendar days of returning from travel.
4.11 In cases where a reimbursement to the University is required, a University invoice will be raised for the private travel component. The reimbursement should be coded to the same account as the travel cost (e.g. airfare). The reimbursement must be made within 14 days of the date of the invoice or by 21 April following the end of the relevant FBT year, whichever is earlier.
Travel Decision Tool Example
Business Travel Diary Template
Business Travel Diary Example
Completing a Travel Diary Guide
Examples for FBT on University and Private Travel