FBTnews - 2007
Issue 20 September 2007
In this issue:
- Private use of laptop computers and cellphones
- Free, subsidised or discounted goods and services - exemptions
- General exemption when you file annual or income year returns
- Fringe benefit tax income year return (IR421)
- FBT prescribed rate on low-interest loans
- Due date for your return
Private use of laptop computers and cellphones
Do you know that the private use of business tools you provide your employees with may be exempt from FBT? This includes ite s such as laptops and cellphones used mainly for business and which, individually, cost $5,000 or less.
Example
Extreme Dirt Design provide all their mobile design consultants with laptop notebooks and a cellphone. The notebooks cost around $3,000 and the cellphones around $900 each. From time to time Regan uses his laptop for private use. This private benefit is exempt from FBT because the notebook was provided mainly for work purposes. Regan uses his cellphone for both business and private calls, as he doesn't want to manage two cellphones. As the cost of the cellphone is less than $5,000 the private use is also exempt from FBT.
Free, subsidised or discounted goods and services - exemptions
In our June issue of this newsletter, we looked at the maximum employee and employer exemption amounts and gave an example of when FBT was payable for free goods provided to employees of Extreme Dirt Design for the June quarter. Remember, if you are providing these types of benefits to your employees, you are not limited to an employer exemption amount per quarter. What you do have to consider is the amount of benefits you've provided in the preceding three quarters, along with the amount you are providing in the current quarter. The $15,000 employer maximum is a rolling total so each time a new quarter is added, the oldest quarter drops out of the equation.
Example
Extreme Dirt Design provides free, subsidised or discounted goods and services as follows:
| Three preceding quarters | Value of benefits provided to employees | Cumulative total per quarter |
|---|---|---|
| December 2006 |
$10,000 |
$10,000 |
| March 2007 |
Nil |
$10,000 |
| June 2007 |
$3,000 |
$13,000 |
| Current quarter September 2007 |
Amount available before FBT applies in this quarter is $2,000 |
$15,000
|
Note
To be able to provide $10,000 of benefits in December 2006, the amount provided in the three preceding quarters must not have been more than $5,000. If the value of benefits provided in the September 2007 quarter is more than $2,000 (eg $3,000) the employer maximum for that quarter and the three preceding quarters will be exceeded and FBT will be payable on the whole amount ($3,000) for that quarter.
If the amount of benefits provided in the current quarter is $2,000, the amount available in the December 2007 quarter will be $10,000.
Example
| Three preceding and current quarter | Value of benefits provided to employees | Cumulative total per quarter |
|---|---|---|
| March 2007 |
Nil |
Nil |
| June 2007 |
$3,000 |
$3,000 |
| September 2007 |
$ 2,000 |
$5,000 |
| December 2007 |
$ 10,000 |
$15,000 |
Note
While monitoring the amount of the employer exemption each quarter, you must not exceed the employee maximum of $200 per employee.
General exemption when you file annual or income year returns
You're an employer filing annual or income year returns, you have:
- an exemption of $800 for each employee per year
- a maximum exemption for all employees of $15,000 per year. If you're in a large organisation, check with other sections to make sure this maximum has not already been used up.
Note
If the value of an employee's fringe benefits goes over $800 or the total value for all employees goes over $15,000 for a year, the full value of the goods and services benefits is subject to fringe benefit tax. You cannot deduct the exemption first.
Return period is less or more than a year
If this is your first return or final return the period covered may differ from a normal income year. If this is the case, make the following adjustment:
Days covered by return divided by 365 multiplied by $800
The exemption doesn't apply where a fringe benefit arises as a result of an employee receiving any of the following:
- private use of a motor vehicle by an employee
- private use of pool vehicles
- subsidised transport
- employment-related loans
- contributions to superannuation schemes that are subject to FBT
- contributions to life or health insurance.
Fringe benefit tax income year return (IR421)
This is the return for companies with shareholder-employees. It covers the same period as the company's accounting year and the due date for filing the return and payment is the same as that for paying end-of-year income tax.
We issue returns for early balance date filers in September each year. You can file your return electronically through our website, download copies from our website or request copies by calling INFOexpress on 0800 257 772.
For all other income year filers we issue returns in January of each year.
FBT prescribed rate on low-interest loans
The rate used to calculate fringe benefit tax on low-interest, employment-related loans for the quarter beginning 1 July 2007 is 9.79%. This is an increase from the previous rate of 9.55%.
Due date for your return
Your Fringe benefit quarterly return (IR420) for the period 1 July 2007 to 30 September 2007 is due on 22 October 2007.
Alison Parks
Manager
Customer Operation
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Date published: 17 Sep 2007
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