Authored by the editors of the FBT Compliance Guide 2017.
As FBT season looms, tax professionals advising not-for-profits will want to be across important FBT changes affecting their clients from the 2016/17 year (ie from 1 April 2016).
Particularly, clients that provide their employees with salary-packaged meal entertainment and other entertainment benefits will be affected.
While these not-for-profit employers generally have access to an FBT exemption or a rebate, the exemption or rebate is subject to a cap on grossed-up taxable benefits for each employee. For the 2016/17 FBT year, the cap is $17,667 and $31,177 (depending on the type of employer).
From 1 April 2016, a new separate cap of $5,000 applies for benefits which are salary packaged meal entertainment and entertainment facility leasing expense benefits.
The FBT liability calculation for such employers can be rather tricky, and involves a series of steps.
For example, for a rebatable employer, this involves calculating each employee’s total Type 1 and Type 2 individual grossed up non-rebatable amount, then applying first the rebate cap of $31,177 and then identifying separately the relevant salary packaged entertainment benefits for purposes of the new $5,000 cap in order to arrive at the aggregate non-rebatable amount. This amount is then used to calculate the employer’s rebate for the year.
Wolters Kluwer’s FBT Compliance Guide 2017 discusses the operation of the new rules and includes flow charts to help navigate the relevant legislative provisions (p 449 of the Guide for rebatable employers and p 457 of the Guide for exempt employers).
The Guide also contains two Worksheets setting out the steps to calculate the aggregate non-rebatable amount for rebatable employers (Worksheet 5A on p 452 of the Guide) and the aggregate non-exempt amount for exempt employers (Worksheet 6A on p 460 of the Guide) for an employee who is provided salary packaged entertainment benefits.