Contact: Karen Stein
Deloitte
Partner - Indirect Taxes
+61-2-9322 7387

Contact: Amanda Kennedy
Deloitte
Media Relations
+61 [0] 418 806 477

 The change to the FBT threshold does not immediately reduce FBT compliance costs for business according Deloitte Employment Taxes Partner, Karen Stein. 

“While increasing thresholds reduces the amount of FBT payable, it does not reduce the compliance cost for employers,” Ms Stein said.

“A considerable amount of time is spent by employers in working out whether benefits are exempt from FBT.

“This continues to be a headache and expense for business and was highlighted in the Hendy-Warburton report last month.

“We welcome the Government’s change today to increase the value of such minor benefits from $100 to $300 (effective from 1 April 2007), but it will not by itself reduce the costs associated with determining whether these low dollar benefits meet the remaining requirements of this exemption.

“Determining whether the benefits are provided on an infrequent and irregular basis, and then whether the exemption can actually be applied, is still a significant compliance burden.

“Businesses need greater guidance to help them determine whether benefits are regarded as irregular and infrequent and we are pleased the Government has asked the ATO to provide guidance in this area.”

Ms Stein said that increasing the Reportable Fringe Benefits Amount (RFBA) thresholds from $1000 to $2000 per employee from 1 April 2007 will also have little impact on reducing compliance costs.

“Although the change in the threshold will benefit employees whose current RFBA impacts particular surcharges and levies (such as the Medicare Levy surcharge, child support payments and HECS), the cost of compliance for employers will still remain,” she said.
 
“Employers will still need to have to have systems in place to identify which of their employees receive fringe benefits each year and attribute a value to those benefits. 

“Only when this process is completed will employers be able to determine whether an employee has a RFBA of $2000 or more,” says Ms Stein. 

“Lifting the FBT thresholds is a welcome initial improvement, but significantly more can be done to tackle the real deadweight costs of FBT compliance for employers.”