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A New Tax System (Fringe Benefits Reporting) Bill 1998
Schedule 1 Amendment of fringe benefits tax legislation

   

Fringe Benefits Tax Assessment Act 1986

1  After Part II

Insert:

Part IIA Core provisions

Division 1 Working out an employer’s fringe benefits taxable amount

5A   Simplified outline of this Division

                   The following is a simplified outline of this Division:

This Division explains how to work out an employer’s fringe benefits taxable amount for a year of tax. This is the amount on which the employer must pay fringe benefits tax (see section 66).

5B   Working out an employer’s fringe benefits taxable amount

             (1)  An employer’s fringe benefits taxable amount for a year of tax is the amount worked out using the formula:

Note:          Other provisions affect the fringe benefits taxable amount. For example, see section 124 (about assessments).

             (2)  Subsection (1) is subject to section 135G.

Note:          Section 135G allows the fringe benefits taxable amount to be worked out using the employer’s aggregate fringe benefits amount from an earlier year of tax in special cases.

Division 2 Working out an employer’s aggregate fringe benefits amount

5C   Aggregate fringe benefits amount

                   Work out an employer’s aggregate fringe benefits amount for a year of tax as follows:

Method statement

Step 1.    Work out under Division 3 for each of the employer’s employees the individual fringe benefits amount for the year of tax in respect of the employment of the employee by the employer.

Step 2.    Add up all the individual fringe benefits amounts worked out under Step 1.

Step 3.    Add up the taxable value of every excluded fringe benefit (other than an amortised fringe benefit) relating to an employee of the employer, the employer and the year of tax.

                   Note:             Subsection 5E(3) explains what is an excluded fringe benefit.

Step 4 .   Add the total from Step 2 to the total from Step 3.

                   Note:             The result of Step 4 is the employer’s aggregate fringe benefits amount if there are no amortised fringe benefits or reducible fringe benefits in relation to the employer.

Step 5.    Add to the total from Step 4 the amortised amount for the year of tax of each amortised fringe benefit (if any) relating to an employee of the employer, the employer and any year of tax.

Step 6.   Subtract from the total from Step 5 the reduction amount for the year of tax of each reducible fringe benefit (if any) relating to an employee of the employer, the employer and the year of tax.

Note:          Other provisions may affect the aggregate fringe benefits amount. For example, see section 67 (about arrangements to avoid or reduce tax), section 135L (about reducing the aggregate fringe benefits amount of an employer who is in business for only part of a year of tax) and section 152B (about entertainment facility leasing expenses).

Division 3 Employee’s individual fringe benefits amount

5D   Simplified outline

                   The following is a simplified outline of this Division:

An employee’s individual fringe benefits amount is the employee’s share of the taxable value of fringe benefits (with some exclusions) provided in respect of his or her employment.

5E   Employee’s individual fringe benefits amount

Overview

             (1)  This section explains how to work out an employee’s individual fringe benefits amount for a year of tax in respect of the employee’s employment by an employer.

General rule

             (2)  The individual fringe benefits amount is the sum of the employee’s share of the taxable value of each fringe benefit that relates to the year of tax and is provided in respect of the employment other than an excluded fringe benefit.

What is an excluded fringe benefit ?

             (3)  An excluded fringe benefit is a fringe benefit:

                     (a)  constituted by the provision of meal entertainment (as defined in section 37AD, whether or not the employer has elected that Division 9A of Part III apply to the employer); or

                     (b)  that is a car parking fringe benefit (see subsection 136(1)); or

                     (c)  whose taxable value is wholly or partly attributable to entertainment facility leasing expenses; or

                     (d)  that is a remote area housing fringe benefit (see subsection 136(1)); or

                     (e)  whose taxable value is worked out under section 59 (about remote area residential fuel); or

                      (f)  whose taxable value is reduced under section 60 (about remote area housing); or

                     (g)  that is an amortised fringe benefit (see subsection 136(1)); or

                     (h)  that is a reducible fringe benefit (see subsection 136(1)); or

                      (i)  that is a benefit prescribed by the regulations for the purposes of this paragraph; or

                      (j)  that relates to occasional travel to a major population centre in Australia provided to employees and family members resident in a location that is not in or adjacent to an eligible urban area; or

                     (k)  that relates to freight costs for foodstuffs provided to employees resident in a location that is not in or adjacent to an eligible urban area.

If section 135G applies to the employer

             (4)  If:

                     (a)  section 135G applies for working out the employer’s liability to pay tax for the year of tax; and

                     (b)  one or more fringe benefits are provided in relation to the year of tax in respect of the employee’s employment by the employer;

the employee’s individual fringe benefits amount is the amount determined by the employer in writing. This subsection has effect despite subsection (2).

Note:          Section 135G allows use of the employer’s aggregate fringe benefits amount for an earlier year of tax in working out the employer’s liability for tax for the current year of tax.

Determining individual fringe benefits amounts

             (5)  In making a determination under subsection (4), the employer must:

                     (a)  ensure that the total of the amount or amounts determined by the employer under that subsection for the year of tax equals the aggregate fringe benefits amount used for working out the employer’s liability to pay tax for the year of tax; and

                     (b)  if that subsection applies to 2 or more of the employer’s employees for the year of tax—act reasonably, having regard to the fringe benefit or fringe benefits provided in relation to the year of tax in respect of each employee’s employment.

5F   Working out the employee’s share

Overview

             (1)  This section explains how to work out an employee’s share of the taxable value of a fringe benefit relating to the employee, an employer and a year of tax.

Individually-valued benefit provided in respect of one employee

             (2)  The employee’s share is 100% of the taxable value if:

                     (a)  the fringe benefit was provided in respect of the employment of the employee by the employer and was not provided in respect of the employment of anyone else; and

                     (b)  the taxable value of the fringe benefit was worked out for that particular fringe benefit (not merely as part of the total taxable value of fringe benefits in a class including that particular benefit).

Individually-valued benefit shared by 2 or more employees

             (3)  The employee’s share is so much of the taxable value as is reasonably attributable to the provision of the fringe benefit in respect of the employee’s employment by the employer, taking account of any relevant matters, if:

                     (a)  the fringe benefit was provided in respect of the employment of the employee by the employer and in respect of the employment of another employee; and

                     (b)  the taxable value of the fringe benefit was worked out for that particular fringe benefit (not merely as part of the total taxable value of fringe benefits in a class including that particular benefit).

Benefits valued in aggregate

             (4)  If:

                     (a)  the fringe benefit is one of a class of fringe benefits provided in respect of the employment of one or more employees by the employer; and

                     (b)  the total taxable value of all the fringe benefits in the class is worked out by a single calculation;

the employee’s share of the taxable value of the fringe benefit is so much of the total taxable value as is reasonably attributable to the provision of the fringe benefit in respect of the employee’s employment by the employer, taking account of any relevant matters.

Shares of different employees must total 100% of taxable value

             (5)  If:

                     (a)  the fringe benefit was provided in respect of the employment of 2 or more employees; and

                     (b)  each of those employees has an employee’s share of the taxable value of the fringe benefit;

the sum of those shares must equal the taxable value of the fringe benefit.

Single employee’s shares must equal total taxable value

             (6)  If all the fringe benefits in a class described in subsection (4) are provided in respect of the employment of the same employee (and none of them is provided in respect of the employment of anyone else), the sum of the employee’s shares of the taxable value of the fringe benefits must equal the total taxable value of the fringe benefits.

2  After subsection 7(2)

Insert:

          (2A)  Subsection (2) does not apply to a car that:

                     (a)  is used by an ambulance service, a firefighting service or a police service; and

                     (b)  is visibly marked on its exterior for that use; and

                     (c)  is fitted with:

                              (i)  a flashing warning light; and

                             (ii)  a horn, bell or alarm that can give audible warning of the approach or position of the car by making sounds with different amplitude, tones or frequencies on a regular time cycle.

3  Section 37BA (note)

Omit “subsection 136(1)”, substitute “section 5C”.

4  Subsection 37CB(1) (note)

Omit “subsection 136(1)”, substitute “section 5C”.

5  Before Part XI I

Insert:

Part XIB Reportable fringe benefits totals

135M   Simplified outline of this Part

                   The following is a simplified outline of this Part:

An employee’s reportable fringe benefits total for a year of income is the sum of each of the employee’s reportable fringe benefits amounts for the year of income (see section 135N). (The total is taken into account under other Acts; for example in working out some income tax rebates, Medicare levy surcharge and superannuation surcharge and whether the employee must make a repayment of a debt under the Higher Education Funding Act 1988 .)

An employee’s reportable fringe benefits amount from an employer is generally the grossed-up value of the employee’s individual fringe benefits amount from that employer (see section 135P).

Special rules apply for working out the employee’s reportable fringe benefits amount in respect of the employee’s employment if the benefits provided in respect of the employment include exempt benefits under section 57A or 58 (about employment with public benevolent institutions and bodies providing care for sick, elderly or disadvantaged persons) (see section 135Q).

135N   Employee’s reportable fringe benefits total

                   An employee’s reportable fringe benefits total for a year of income is the sum of each of the employee’s reportable fringe benefits amounts for the year of income in respect of the employee’s employment by an employer.

Example:    Sylvia employs Angela, who has a reportable fringe benefits amount of $3,000 for the 1999-2000 year of income from her employment by Sylvia.

                   Angela is also an employee of Geoff, and has a reportable fringe benefits amount of $4,000 for that year of income from her employment by Geoff.

                   Angela’s reportable fringe benefits total for the 1999-2000 year of income is $7,000.

135P   Employee’s reportable fringe benefits amount —general rule

Does an employee have a reportable fringe benefits amount?

             (1)  An employee has a reportable fringe benefits amount for a year of income in respect of the employee’s employment by an employer if the employee’s individual fringe benefits amount for the year of tax ending on 31 March in the year of income in respect of the employee’s employment by the employer is more than $1,000.

Example 1: On 31 May 1999, Sylvia waives a debt of $1,545 that her employee Angela owes her, thus providing Angela with a debt waiver fringe benefit with a taxable value of $1,545 for the year of tax ending on 31 March 2000. Angela has a reportable fringe benefits amount for the year of income ending on 30 June 2000 in respect of her employment by Sylvia.

Example 2: On 1 March 2000, Angela’s employer Neil waives a debt of $900 Angela owes him, providing Angela with a debt waiver fringe benefit with a taxable value of $900 for the year of tax ending on 31 March 2000. However, he does not provide any other fringe benefits for that year of tax in respect of her employment, so Angela does not have a reportable fringe benefits amount for the year of income ending on 30 June 2000 in respect of her employment by Neil.

Size of the reportable fringe benefits amount

             (2)  The reportable fringe benefits amount is the amount worked out using the formula:

where:

individual fringe benefits amount is the employee’s individual fringe benefits amount for the year of tax in respect of the employee’s employment by the employer.

135Q   Reportable fringe benefits amount for some employees of certain institutions

Overview

             (1)  This section explains how to work out whether an employee has a reportable fringe benefits amount for a year of income in respect of the employee’s employment by an employer described in section 57A or 58, and the size of that amount, if:

                     (a)  a benefit is provided in respect of the employee’s employment by the employer; and

                     (b)  the benefit is an exempt benefit because of one of those sections; and

                     (c)  apart from those sections, the benefit would be a fringe benefit relating to the employee, the employer and the year of tax ending on 31 March in the employee’s year of income.

Note:          Section 57A deals with public benevolent institutions, and government bodies employing persons to work in hospitals that are public benevolent institutions. Section 58 deals with persons employed by government bodies, religious institutions and non-profit companies to care for the elderly or disadvantaged.

Does an employee have a reportable fringe benefits amount?

             (2)  The employee has a reportable fringe benefits amount (worked out under subsection (4)) for the year of income in respect of the employee’s employment by the employer if the sum of the following is more than $1,000:

                     (a)  the employee’s individual fringe benefits amount (if any) for the year of tax ending on 31 March in the year of income in respect of the employee’s employment by the employer;

                     (b)  the employee’s individual quasi-fringe benefits amount for the year of tax ending on 31 March in the year of income in respect of the employee’s employment by the employer.

Note:          An employee of an employer described in section 57A will not have an individual fringe benefits amount from that employer, because all benefits provided in respect of employment by that employer are exempt benefits.

What is the employee’s individual quasi-fringe benefits amount ?

             (3)  The employee’s individual quasi-fringe benefits amount is the amount that would be the employee’s individual fringe benefits amount for the year of tax in respect of the employee’s employment by the employer if:

                     (a)  each benefit described in subsection (1) in relation to the employee, employer and year of tax were a fringe benefit; and

                     (b)  there were no other fringe benefits relating to the employee, the employer and the year of tax.

Note:          Section 5E explains how to work out the employee’s individual fringe benefits amount for the year of tax.

Size of the reportable fringe benefits amount

             (4)  The reportable fringe benefits amount is the amount worked out using the formula:

where:

individual fringe benefits amount is the employee’s individual fringe benefits amount (if any) for the year of tax in respect of the employee’s employment by the employer.

individual quasi-fringe benefits amount is the employee’s individual quasi-fringe benefits amount for the year of tax in respect of the employee’s employment by the employer.

rate of tax is the rate of tax for the year of tax.

Relationship with section 135P

             (5)  This section has effect despite section 135P.

6  Subsection 136(1) (definition of aggregate fringe benefits amount )

Repeal the definition, substitute:

aggregate fringe benefits amount has the meaning given by section 5C.

7  Subsection 136(1)

Insert:

employee’s share of the taxable value of a fringe benefit has the meaning given by section 5F.

8  Subsection 136(1)

Insert:

excluded fringe benefit , in relation to an employee, employer and year of tax, has the meaning given by subsection 5E(3).

9  Subsection 136(1) (definition of fringe benefits taxable amount )

Omit “section 136AA”, substitute “section 5B”.

10  Subsection 136(1)

Insert:

individual fringe benefits amount for a year of tax in respect of the employment of an employee by an employer has the meaning given by section 5E.

11  Subsection 136(1)

Insert:

individual quasi-fringe benefits amount for a year of tax in respect of the employment of an employee by an employer has the meaning given by subsection 135Q(3).

12  Subsection 136(1)

Insert:

reportable fringe benefits amount for a year of income in respect of the employment of an employee by an employer has the meaning given by section 135P or 135Q (as appropriate).

13  Subsection 136(1)

Insert:

reportable fringe benefits total of an employee for a year of income has the meaning given by section 135N.

14  Section 136AA

Repeal the section.

15  Section 152B (note)

Omit “subsection 136(1)”, substitute “section 5C”.

16  Application of amendments

The amendments made by this Schedule apply in relation to the year of tax starting on 1 April 1999 and later years of tax.

Fringe Benefits Tax (Application to the Commonwealth) Act 1986

17  Title

After “ tax ”, insert, “ , and for the application of the reportable fringe benefits system, ”.

18  After section 2

Insert:

2A   Objects

                   The objects of this Act are to provide for:

                     (a)  the notional application of fringe benefits tax in relation to benefits provided in respect of the employment of Commonwealth employees; and

                     (b)  the calculation of the reportable fringe benefits totals of those employees; and

                     (c)  the calculation of the reportable fringe benefits amounts of those employees in respect of that employment.