Recent times have been ever tumultuous with the pandemic still impacting our day to day lives and Fringe Benefits Tax (FBT) has been impacted by these events too. The Australian Tax Office (ATO) are aware of this and have provided some guidelines on specific benefits provided to employees that relate to COVID-19 and the FBT implications. We have included a summary of the key areas that you, as an Employer, should consider as you prepare your 2022 FBT return.
Employer FBT Scenarios
Scenario 1 – Employer provides COVID-19 test or pays for the test on employee’s behalf
Under the premise that these benefits constitute work-related preventative health care for the employee, these benefits will generally be exempt from FBT. However, if the benefits were subject to FBT they would potentially be exempt under the minor benefits exemption.
Applying this approach, costs incurred by a small business acquiring the odd COVID-19 test for an employee will likely be a minor benefit. In contrast, a bigger business purchasing a sizeable quantity of COVID-19 tests for a large number of employees would likely constitute work-related preventative health care.
Scenario 2 – Employer provides transport to and from a COVID-19 vaccination clinic
Similarly to providing a test to an employee, transport to a COVID-19 vaccination clinic will be FBT exempt as it constitutes work-related preventative health care. Instances of this being relevant would be where an employee is requiring a vaccination in order to work but is located remotely or does not have transportation. The employer providing a vehicle for the employee to utilize to obtain their vaccination would not result in a motor vehicle fringe benefit.
Scenario 3 – Employer provides counselling to support an employee who is working from home
Counselling support that is considered work related counselling will generally be exempt as it constitutes work-related preventative care. This type of support may be in the form of sessions undertaken via telephone or online platforms as well as in person appointments.
The ATO have taken the attitude that these times have been difficult for many people and understand that an employee’s mental and physical health may have been impacted with employers offering the support employees need to work through these issues.
Scenario 4 – Employer provides protective equipment to protect employees from contracting Covid-19 at work
Equipment, such as gloves, masks and sanitisers, provided to employees to help protect them from contracting Covid-19 at work will be exempt from FBT in certain situations. This exemption falls under the emergency assistance exemption and applies where the equipment is provided to employees who have physical contact with, or work in close proximity, to customers or clients while carrying out their duties or are involved in cleaning premises. Examples of the type of work/workers include:
- the medical profession;
- airline workers;
- hairdressers and beauty employees; and
- retail and hospitality workers.
Equipment provided to employees not within this type of work may still be exempt under the minor benefits exemption where the cost is less than $300 per employee and the benefit provided is minor, infrequent and irregular.
Scenario 5 – Employer-provided car is garaged at employee’s home during a COVID-19 lockdown
Under normal circumstances, a car fringe benefit will arise if an employer makes a car available for the private use of an employee. This is generally the case, even when the car is garaged for a period of time, and not used by the employee. The ATO’s position on this is that the car is still available for the employee’s private use, even if they may not be using it.
With the extended lockdowns placed on individuals due to COVID-19, the ATO has acknowledged that cars may have been garaged at an employee’s residence and not used privately. The ATO also acknowledge that many employers, for security purposes, requested employees continued to garage the cars as opposed to returning the cars to unoccupied business premises. In these circumstances the ATO will accept that the car being provided to the employee is not a car fringe benefit, the requirement being that the car was garaged and not being driven by the employee. Certain conditions must be met for this exemption to apply.
Want more information?
The FBT regime is a comprehensive and complex area to navigate, with the above scenarios providing just a brief outline of a few of the key changes that have taken place in this space due to the impact of COVID-19.
To help you check whether you are exposed to FBT relating to your employees, take our quick and painless FBT survey and have one of our FBT specialists contact you to discuss.
To complete the FBT Questionnaire, click the link here.
Let us help you
As always, we are here to support you with all of your FBT obligations. To book a consultation with one of our FBT specialists, contact us at (03) 5221 6399 or firstname.lastname@example.org.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article
This article was written by Davidsons Accountant David Hovey.