FBT Flashcards
What is FB classified as and under what section
What is extempt benefit classified as
Income which is a “fringe benefit” under the FBTAA is non-assessable non-exempt income s 23L(1) ITAA36
Income which is an “exempt benefit under the FBTAA is generally exempt income s23L 1A
What is the FBT year
How many types of FBT are there
What is the FBT asssed under and who is it imposed on
FBT year: 1st April to 31st March
There are 13 types of fringe benefit, all valued differently
There are 13 types of fringe benefit, all valued differently. FBT imposed on employers
When does a fringe benefit arise and under what section is this definition
S 136 FBTAA98
A benefit is proved during a year of tax
By an employer, an associated of the employer or a third party under an arrangement with the employer or associate of the employer
to an employee or an associate of the employee
In respect of the employment of the employee
There must be nexus between the employer / employee relationship and receiving the fringe benefit.
Under what section are exclusions stated
give some example of exclusions
Give some examples of exempt benefits
S 136 FBTAA98
Salary or wages
superannuation contributions
benefits under employee share schemes
Entempt benefits
- exempt loans
- exempt car expense payment benefits
- minor benefits with taxable value under $300
- tool and certain equipment used primarily in the employees employment
There are 13 FBT categories state the 7 that is relevant and how each category dealt with in the statue
Each is dealt with in two parts, the first part of the legislation deals with the definition of the fringe benefit and the subsection deals with how to calculate the fringe benefit taxable amount. There are further definitions in 136 A.
- Car
- Debt waiver
- Loan
- Expense payment
- Housing
- Property
- Residual
What is the definition of car benefits
A car benefit arises where the employer’s car is made available to the employee for private use. Private use means use other than using it to derive assessable income
What is a debt waiver benefit
What is the taxable amount of the debt waiver fringe benefit
Employer waves the employees obligation to pay the debt.
Taxable value of the debt waiver fringe benefit is the amount of the payment or repayment that has been waived
What is the Loan Fringe Benefit.
What is the taxable value of the loan fringe benefit
Explain the implication of the otherwise deductible rule
Where an employer makes a loan to the employee. The taxable value is the interest that the employee saves by the employer providing the loan at reduced rate of interest.
Taxable value = Notional Interest - Accrued Interest
Reduces the taxable value of the loan fringe benefit where the employee use the loan for income producing activities which are entitled to deductions.
What is the expense payment benefit
What is the difference between in-house property and in house residual benefits
What are other expense fringe benefits
How does the otherwise deductible rule apply
Employer reimburses an employee expenditure
In both cases it is a reimbursement by the employer to the employee in the ordinary course of business. In the case of in house property the purchase is property while residual in house benefits deal with other benefits. Both have to be in the ordinary course of benefits
All other expense payment fringe benefits are external expense payment fringe benefits.
Otherwise deductible need to go over
What is the property benefit
What is the In-house property benefit and external property benefits
How does the otherwise deductible rule apply
Employer provides property to the employee
In-House property benefit : of a sort that is not normally sold as part of the employers benefits. All other types of property benefit
Otherwise deductible : Need to go over
What is the residual benefit
What are the four categories that affect taxable value
What is the period benefits
and how does the otherwise deductible rule apply
Category that captures benefits that does not fall in one of the other definitions
Taxable value will depend on whether benefit is:
- In-house non-period residual fringe benefit
- In house period residual fringe benefit
- External non-period residual fringe benefits
- External period residual Fringe benefit
Period benefits refer to benefits that last for more than a day and non-period benefits last less than a day.
Operates subject to “otherwise deductible” rule (need to research this)
What is unique about calculating taxable values.
When can concessional treatment apply
How does Unreimbursed recipient contribution affect the calculation of FBT
How does otherwise deductible rule affect the calculation of the FBT
How does reduction amount affect the calculation of taxable value of certain fringe benefits
Each kind of fringe benefits has its own valuation rules
Concessional treatment sometimes applies to “in-house” benefits, but not where there is salary sacrifice arrangement
Unreimbursed recipient contributions reduce the taxable value of fringe benefits
“Otherwise deductible rule” reduces the taxable value of fringe benefit
Reduction amounts are subtracted from the taxable value of certain fringe benefits
What is the otherwise deductible rule
what are the Fringe benefits it applies to 6 categories
Generally, reduces the taxable value by the deduction that the employee would have otherwise received if he or she had incurred the expenditure to acquire the benefits
- Loan FB
- Expense payment FB
- Airline transport FB
- Board FB
- Property FB
- Residual FB
What is the formula for the fringe benefits taxable amount
What are the four step to calculate the FBT
Fringe Benefit taxable amount= [ Type 1 aggregate fringe benefits amount ×gross up factor ]+ [ Type 2 aggregate fringe benefits amount × gross up factor ] + aggregate non exempt amount
Gross up factors change depending on the year
Step 1 : Calculate the taxable value of each fringe benefit
Step 2 : Divide benefits into:
“GST – creditable benefits” (Type 1)
“other Benefits” (Type 2)
Step 3: Multiply each type by the gross up factor depending on which year it is.
Step 4: Add the employers “aggregate non-exempt amount” (not examinable)
What is the aim of the gross up factor
Aim of the gross up factors is to remove any biases or advantages from employers providing fringe benefit to employees over paying regular income.
Look at example on p510
