New FBT thresholds and rates for 2021–22
The ATO has released new thresholds and rates for the 2021–22 fringe benefits tax (FBT) year (the year commencing on 1 April this year):
Statutory or Benchmark Interest Rate (e.g. for loan fringe benefits) – 4.52%; and
Record Keeping Exemption (also relevant for eligibility to use the base rate method to calculate FBT) – $8,923.
The cents-per-kilometre rates (for where a motor vehicle other than a car is used privately) are:
Vehicles with an engine capacity of up to 2,500cc – 56 cents/km;
Vehicles with an engine capacity of over 2,500cc – 67 cents/km; and
Motorcycles – 17 cents/km.
The car parking threshold for 2021–22 will be announced once the relevant CPI figure is available.
Living-away-from-home allowances
The ATO has issued the weekly amounts of food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit that it treats as being reasonable for the 2021–22 FBT year. These amounts may be relevant in working out the FBT payable on the LAFHA benefits.
The reasonable weekly amounts for employees in Australia are set out in the table below. See Taxation Determination TD 2021/3 for the 2021–22 reasonable weekly amounts for employees outside Australia.
Amounts of reasonable food and drink – within Australia
*An adult is a person who attained the age of 12 years before 1 April 2021.
** For larger family groupings, add $142 for each additional adult and $71 for each additional child.
FBT exemptions
If your business provides fringe benefits to employees, there are a number of FBT exemptions that are likely to be more significant during the COVID-19 pandemic.
Work laptop, other portable electronic device and tools of trade
Your business may have given or loaned certain eligible work-related items to employees to facilitate them working at home or may have reimbursed them for expenditure they incurred on such items.
An eligible work-related item is exempt from FBT (including where the cost is reimbursed) if it is:
Primarily for use in the employee's employment; and
Not a duplicate of something with a substantially identical function that has already been provided to the employee in the FBT year (unless it is a replacement). There is an exception for small and medium businesses (see below).
An eligible work-related item is:
A portable electronic device – e.g. a laptop, tablet, smart phone and calculator, but not a desktop computer;
Computer software;
Protective clothing;
A briefcase; and
A tool of trade.
A small business (aggregated annual turnover less than $10 million) can provide multiple portable electronic devices to an employee and claim the exemption for each item, even where the items have substantially identical functions.
This exemption for multiple devices will be extended from 1 April 2021 to businesses that have an aggregated annual turnover of at least $10 million but less than $50 million.
General office equipment
If your business lends general office equipment (e.g. desks, chairs, cabinets, stationery and computer monitors) to employees during temporary working from home arrangements due to COVID-19, the relevant fringe benefit is exempt from FBT if:
The equipment is ordinarily located on business premises; and
Is wholly or principally used directly in connection with business operations.
The ATO considers that office equipment that your business loans to an employee to support a working from home arrangement that will continue on a long-term basis is unlikely to be exempt.
However, a fringe benefit may be exempt if your business makes a “no-private-use declaration” that covers all office equipment loaned to employees to support their working from home arrangements where:
The equipment is subject to a consistently enforced policy in relation to its use; and
This use means the benefits would have a taxable value of nil.
The exemption is not lost just because there is some incidental use of the equipment outside of work hours while it is located at an employee's home.
Counselling and health care
Counselling services provided to support an employee's working from home arrangement may be exempt from FBT under the rules for work-related counselling. Similarly, health care provided to an employee to support their working from home arrangement may also be exempt from FBT if it is the provision of work-related preventative health care.
Minor benefits
Where the taxable value of an item (or the amount reimbursed) is less than $300 (including GST), the benefit will be exempt if it qualifies a minor benefit. This depends on the frequency and regularity with which similar or identical benefits are provided.
FBT return
Don’t forget that your business must lodge its FBT return for 2020–21, and pay any FBT liability, by 21 May 2021. This date may differ if the return is lodged through a tax agent.
The ATO may grant an extension of time to lodge and pay if a business is experiencing difficulties because of COVID-19 or floods.
George Samaras
Principal
Taxation, Family and Business Lawyers
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