Contact: Elizma Bolt
Deloitte
Partner, Tax
+61 2 9322 7614

Contact: Amanda Kennedy
Deloitte
Media and communications manager
+61 3 9208 7407

Changes to exclude pooled or shared cars from FBT reporting is a step in the right direction to ease the compliance burden on business according to Deloitte Employment Taxes Partner, Elizma Bolt.

“It is not easy to determine a fair and reasonable method of allocating the taxable value of FBT when  employees pool or share a vehicle,” Ms Bolt said.

“There has been a constant debate about how to best allocate reportable fringe benefits between employees, particularly as to whether you allocate benefits according to time used or distance travelled.

“One employee might have only had the vehicle for two months but may have driven a considerable amount of non-business kilometres, whereas the other employee may have had it for six months but driven half that number of kilometres.

“Often employees are confused and angry to see the way their FBT has been calculated, an issue that will no longer cause grief amongst employers or employees following changes announced today.

“It does away with the need to maintain significant records on the use of the vehicle, which has previously negated the benefit of the FBT statutory formula which was designed to minimise record keeping.”

Ms Bolt also welcomed news that the Tax Office will clarify the minor fringe benefits exemption by providing clearer guidance in respect to the terms ‘irregular’ and ‘infrequent’.

“Until now it has not been clear how many times ‘irregular’ and ‘infrequent’ benefits could be provided exempt from FBT.

“Often the exemption is used in scenarios like end of year Christmas parties but as there can be lots of other examples during the year, clarification on the point at which an FBT liability arises will be welcome.”

Ms Bolt was also pleased the threshold for ‘irregular’ and ‘infrequent’ benefits was increasing from $100 to $300 from 1 April 2007.

“We are however disappointed that the Government did not see the benefit of allowing employers to group for FBT purposes.

“In situations where there is a high instance of movement of staff within the same corporate group, allowing fringe benefits to be grouped when an employee transfers from one employing entity to another could have significant compliance savings.”