Fringe Benefit Tax 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.

Tip! If you are uncertain whether any fringe benefits your business provides to employees are exempt, e.g. as a minor benefit, or how to calculate the taxable value of any benefits that are not exempt, talk to your tax adviser. For example, the otherwise deductible rule may apply to reduce the taxable value of a fringe benefit.

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 your business is experiencing difficulties because of COVID-19 or floods.

To find out more on each exemption, please see this ATO link – ato.gov.au

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