Fringe Benefits Tax Questionnaire - Kreston Dormers



AttachmentFringe Benefit Client Questionnaire?This attachment has been prepared to aid you in completing your Fringe Benefit Client Questionnaire. The purpose of this attachment is to provide you with more information regarding Fringe Benefits Tax (FBT) so that we may help identify fringe benefits and reduce your potential exposure to penalty taxes and interest.?We will be happy to provide further information and also refer you to the Australian Taxation Office publications “Fringe Benefits Tax – A Guide for Employers” NAT – 1054.?The following is an explanation of the major types of benefits that are potentially subject to FBT in everyday business dealings. Please note that each of the benefits described has various inclusions, exclusions and exemptions that can’t be explained in detail here. However, these can be considered once we have identified whether a particular type of benefit has been provided.1. Motor VehiclesMotor Vehicles are by far the most common fringe benefit. Essentially, this type of benefit arises where an employer’s car is used by an employee for any private purposes, notwithstanding that the vehicle is also used for business purposes. Generally, this situation arises where an employee is provided with a vehicle for travel between work and home and the car is parked at the employee’s home or the employee uses a vehicle for any other private use.?The Fringe Benefits Tax Assessment Act (FBTAA) allows two methods for calculating the taxable value of the motor vehicle fringe benefit -?Statutory Formula MethodOperating Cost Method?We recommend providing us with details to calculate the taxable value under both the above methods; this then enables us to choose the method which gives you the best result for FBT purposes.?The record keeping for the operating cost method is much more onerous than the statutory formula method but this can, in many circumstances, achieve a lower FBT result. The taxable value is calculated by applying the log book percentage against the costs of operating the vehicle for the FBT year. ?Even after we have done all the calculations, we may reduce the taxable value of the fringe benefit to nil through employee reimbursements or contributions. This can actually be paid in cash (e.g. employee pays for petrol) but is usually performed by way of a journal entry against your loan account (i.e. reducing your loan balance with the company). Even though we may not physically lodge an FBT return in many cases, we still need all of the information to perform the necessary calculations which enable us to provide you with an appropriate journal entry.2. Loan BenefitsA loan fringe benefit arises where an employer makes a loan to an employee, including a director. For these purposes a “loan” includes:?Advance of money including salary advancesProvision of credit Payment of an amount on behalf of another person where that person has an obligation to repay.The loan fringe benefit amount is the amount of interest that would be payable on the loan using the benchmark interest rate of 5.65% for the year.?A general ledger printout of the loan account gives us most of the information to enable us to do the calculations. We may already have prepared some accounts for you during the year and have details of these movements. Alternatively, these details may need to be compiled now.?If these loans are used for income producing purposes (e.g. an employee has borrowed money from the company to buy shares) there will be no taxable fringe benefit but we will still need to do the calculations for substantiation purposes. If interest is already being charged on the loan (e.g. a loan to an employee) then we will need the interest rate charged or the interest actually charged in order to calculate the taxable fringe benefit.Note: A loan of property is not a loan benefit; this is defined as a “residual benefit”, which is discussed in a later section.3. Debt Waiver BenefitsA taxable benefit arises where an employer releases an employee from a debt. The taxable value is the amount waived, so therefore we will require this information if applicable. Please provide the following for each debt waiver: Name of employeeAmount of debt waiverDate of debt waiver4. Expense Payment BenefitAn expense payment benefit arises where an employer pays or reimburses private expenses incurred by employees, including directors.?Examples of such expenses include:?????????? Children’s school fees????????? Home office computers????????? Private telephone accounts????????? Rates and land taxes????????? Electricity, gas (heat & power)????????? Medical and health benefits????????? Insurance premiums????????? Travel/credit cards????????? Drivers licence????????? Mortgage/loan payments????????? Holiday transport????????Other - please ask us if you have any queries?In most cases, where the employee would have been allowed a tax deduction for the expense if the employer had not paid or reimbursed it, then the taxable value is reduced to the extent it is deductible.?We will need the following details in relation to expense payment fringe benefits:?The name of the employee for whom it was paid;The date, nature and amount of the payment;The extent to which, if any, that the payment is tax deductible to the employee.Note: Any item for which depreciation will be claimed is excluded from being a deduction.5. Housing BenefitsA housing fringe benefit arises where an employer provides an employee a right to occupy or use accommodation as a usual place of residence. This accommodation includes the following: house, flat, unit, hotel, motel, guesthouse, bunkhouse, ship, oil rig, caravan or mobile home. If the accommodation cannot be described as the employee’s usual place of residence then the benefit will not be a housing benefit, but will be a residual benefit. Note: Accommodation whilst travelling on business will definitely not be a housing benefit. Depending on the circumstances, expenditure of this type may be fully tax deductible.6. Living Away From Home Allowance (LAFHA) BenefitsA LAFHA benefit arises where an employer compensates the employee for the additional expenditures he is obliged to incur in providing board and accommodation for himself at his place of employment while, at the same time, maintaining his home elsewhere.?From 1 October 2012, the following FBT changes have been introduced to LAFHA-based benefits:?Employees are required to “maintain a home in Australia for their immediate use and enjoyment” whilst they are living away from home;The concessional valuation rules for certain LAFHA-based fringe benefits will be limited to the first 12 months that the employee is actually living away from home at the one location (referred to as the 12-month rule);New substantiation requirements must be satisfied before the taxable value of a LAFHA-based fringe benefits can be reduced, which vary according to the type of expense being incurred;There are special concessions that apply for employees regarded as being under “fly-in-fly-out” or “drive-in-drive-out” employment arrangements;There have also been changes to the declaration requirements that must be satisfied before the concessional tax treatment applies to LAFHA-based benefits.?The extent to which a LAFHA benefit is subject to FBT will be determined on the basis of the facts, so please provide as much information as you can about such an arrangement if you think it applies to you.Car Parking Fringe BenefitsCar parking facilities provided by an employer to an employee may give rise to a car parking benefit. A car parking benefit arises where the following conditions are satisfied:A car is parked on “business premises” that are owned or leased by or otherwise under the control of the employer The car is parked on the business premises for more than 4 hours in total from 7am to 7pm on the particular dayThe provision of car parking facilities is in respect of the employee’s employmentThe car is parked at or in the vicinity of the primary place of the employee’s employmentThe car on that day is used in connection with travel from home to workThere is a commercial parking station within one kilometre radius to where the car is parked and charges an all-day parking fee more than $8.37 at the beginning of the FBT year (ie. 1 April 2015)?Small Business Car Parking ExemptionIf you are a small business employer, car parking benefits you provide are exempt if all the following conditions are satisfied:The parking is not provided in a commercial car park;You are not a government body, a listed company, or a subsidiary of a listed public company; andEither your gross total income for the last income year before the relevant FBT year was less than $10 million, or you were a small business entity for the last income year before the relevant FBT year. As there are five methods of calculating the taxable value of a car parking fringe benefit, you will need to discuss your circumstances with us to determine the information you may need to provide. However we will generally need to know how many car parking spaces can reasonably be used by employees and the lowest commercial car park rate charge within 1 km of your business. 8. Property BenefitsA property benefit arises when an employee is provided with free or discounted property by the employer. Property includes goods, real property such as land and buildings and choses in action such as shares and bonds.?If you have provided employees with any goods during the year please provide as many details as possible (i.e. what was provided) to determine whether a fringe benefit has been provided.9. EntertainmentThis is one of the most complex areas of tax law. Depending on the type of entertainment provided and the circumstances in which the benefit was provided, entertainment could be included in a number of fringe benefit types. However at this stage we are only asking you to determine whether you potentially provided an entertainment benefit for FBT purposes.Entertainment includes provision of food, drink or recreation provided to employees. However meal entertainment has to be separately identified as it contains special valuation rules and is also excluded from reportable fringe benefits.Meal Entertainment Fringe BenefitsMeal entertainment fringe benefit consists of entertainment by way of food and drink and also includes, travel and accommodation in connection with the entertainment (eg. taxi travel to a restaurant)?The taxable value can be calculated using of the following methods:?The actual expenditure methodThe 50/50 split methodThe 12-week register methodWe will generally calculate the Fringe Benefit Tax implication under the 50/50 method and the actual method to determine which gives the best FBT result.?There are some circumstances which the provision of food and drink may not constitute as meal entertainment fringe benefits. These include:?Staff amenitiesMorning and afternoon teaFood or drink provided to employees while on business travel overnightFood and drinks provided at professional seminarsWe only require you to provide details that would give rise to a fringe benefit; however, it also gives us the opportunity to determine whether items of entertainment are tax deductible. Giving us more details about these transactions will aid us in completing your year end tax returns. To help us determine the FBT consequences please provide us with the following details:?How many employees, family members or clients were involved?The situation – when and where the food or drink is provided. Was it on the employer’s premises, was the employee travelling on business?The amount of the expenditure involved and whether any of this expense was reimbursed.Although entertainment provided to clients is not subject to FBT, records must be kept on all entertainment (for both staff and client).ExemptionPlease note, although some meal entertainment may be exempt (eg. Under the minor benefits exemption or the exemption for the property benefits consumed on business premises) these will be included as meal entertainment fringe benefits if the 50/50 method or the 12 week register methods are used.10. Residual Fringe BenefitEssentially, any other benefits you may have provided to employees in respect to their employment are covered by residual fringe benefits. Examples of residual fringe benefits are free or discounted services, such as travel or performance of work, the use of property and the provision of insurance coverage. The provision of vehicles other than cars, (e.g. hire taxis, rental cars, trucks and motor cycles) also fall under this category.?Please call your business adviser at Kreston Dormers to discuss any potential residual benefits you may be providing to employees.12. Contributions to Worker Entitlement FundsA worker entitlement fund is a trust fund for employee long service leave, sick leave or redundancy payments. These funds are also referred to as redundancy trusts or redundancy funds.?If you are an employer who makes payments to a worker entitlement fund, you need to ensure that the fund is prescribed.?Paying into a prescribed fund will ensure you do not pay FBT on the amounts paid into the funds.13. Exempt BenefitsThe FBTAA has various exemptions relating to every category of fringe benefits. They are not all covered here, however please note the following tax deductible, but FBT exempt items an employer may provide to an employee, called “Eligible work related items”.?The “Eligible work related items” include:?Mobile or car phones used primarily in the employee’s employmentProtective clothing required for employment of the employeeBriefcasesCalculatorTools of tradeComputer software used in the employee’s employmentElectronic diary or similarNotebook computer, laptop or similar portable computer. Only relates to lighter, portablecomputers.?Please note the above items must be used primarily by the employee at work. If you have any queries in relation to any of the above please do not hesitate to contact for further information.Minor Benefit ExemptionBroadly the minor benefit exemption applies when a benefit provided to an employee is less than $300 inclusive of GST and the benefit provided is not of a frequent and regular nature. Under the minor benefits exemption no GST input tax credits should be claimed on these expenses. Although these minor benefits are exempt from FBT they will not be deductible for income tax purposes. The minor benefit exemption does not apply if you elect the 50/50 method.Please contact your Kreston Dormers adviser if you feel this applies to you.Form 1Fringe Benefits Tax Questionnaire?Client:?????Date:??????Thank you for investing the time to complete this questionnaire.Please return the questionnaire and the relevant attached schedules to us as soon as possible.About Fringe Benefits TaxThere are many different types of Fringe Benefits to consider. In order to determine which ones are applicable to your business for the year please respond to the following questions.(If you require further explanation regarding the nature of these benefits please call us.)We have referred to you as the employer (including all associates and third parties under arrangement with you)1.????????????? Benefits PaidYesNo?1.1????????Has any non-cash benefit been provided during the year to past, present or future employees including associates or third party arrangements to employees or their associates such as providing a company maintained car, or low interest loan????2.????????????? Motor Vehicle BenefitsYesNo?2.1?????Have any cars (employer owned or leased) been used privately or made available for private use by the employees or associates (including working directors) during the year. A car is available for private use on any day that the car was garaged at or kept near a place of residence of an employee or associate. If the answer is no, you do not need to complete this section. If yes, please complete the attached Form 2 – Motor Vehicle Schedule.???2.2????????Have you disposed of or purchased any motor vehicles during the FBT year? If yes, please show details on Form 2 and provide copies of the invoices.???2.3????????Have you taken a record of the Odometer Reading at 31/3/2016?for each car provided to employees/associates????2.4????????Do you pay expenses for any employee’s/associate’s personal vehicles (e.g.?fuel)????2.5????????Do you reimburse lease payments????2.6????????Have you sold a motor vehicle to an employee at less than market value?2.7???????Have any motor vehicle leases been renewed, extended or paid out?Please provide details3.?? Loan BenefitsYesNo?3.1????????Has the employer or its associates provided a loan to any employee, director or their associates (including salaries paid in advance). The benchmark interest rate commencing 1 April 2015 is 5.65%???4.?????????? Debt WaiverYesNo?4.1????????Have you released any employees from a debt that was previously owed to you????5.?????????? Expense PaymentYesNo?5.1????????Have you paid any expenses on behalf of employees/directors? Including Motor Vehicle expenses for employee owned cars???5.2????????Have you reimbursed employees/directors for any expenses paid by them?If yes, please complete Form 3 – Expense Payments Benefits.???6.?????????? HousingYesNo?6.1????????Has any employee/director been provided with a right to use a dwelling as their usual place of residence????7.????????? BoardYesNo?7.1???????Has the employer provided any employees with accommodation and two meals or more per day? Do you provide meals to employees/directors as a result of an industrial award or under an employment arrangement????8.?????????? Living Away From Home AllowanceYesNo?8.1????????Do you provide employees/directors an allowance or reimburse their accommodation and food costs when they are required to live away from their usual place of residence????9.????????? Airline Transport BenefitsYesNo?9.1????????Do you provide employees/directors (of the travel industry) with free or discounted airline travel????10.??????? Property BenefitsYesNo?10.1?????Do you provide property or goods to employees/directors that are normally sold as part of the business????10.2?????Do you provide property or goods to employees/directors or arrange with a third party to supply property to the employees at a discount or free that are not normally sold as part of the business????11.??????? Car ParkingYesNo?11.1?????Do you provide car parking facilities to employees/directors?11.2?????Is there a commercial all day car park within a kilometre radius that charged more than $?8.37?per day at the beginning of the 2016 FBT year?12.??????? EntertainmentYesNo?12.1?????Have you or a third party under an arrangement with you provided meal entertainment to employees or their associates? If yes, complete the attached Form 4 - Entertainment Expense Schedule.???13.??????? Residual BenefitsYesNo?13.1????Have you paid or provided any other benefits to employees/directors not included in the above?If yes, please provide details below:___________________________________________________________________________________________________________________________________________________________________________???14.??????? Worker Entitlement FundYesNo?14.1?????Have you made any contributions to a Worker Entitlement Fund????14.2?????Was the Fund an existing Fund at the time that the contributions were made????15.??????? Record KeepingYesNo?15.1?????Have you reviewed your cash book and/or financial statements to ensure all employee Fringe Benefits have been brought to account during the FBT year from 1 April 2015?to 31 March 2016????15.2?????Would you like us to perform a prudential FBT review of your business?A prudential FBT review is a thorough look at your business in order to establish if there are any fringe benefits issues that should be addressed.???15.3?????Would you like any salary packaging advice????15.4?????Would you like us to explain the relevant FBT rulings relating to your business?????Name:?Signature:Date:???FORM 2?Motor Vehicle ScheduleGST INCLUSIVEFringe Benefits Tax 1 April 2015? to 31 March 2016?Vehicle 1Vehicle 2Vehicle 3?GST InclusiveGST InclusiveGST InclusiveSECTION A ???Name of driver^ (who used the car for private use during the year)???Make/model???Registration No.???Purchase dateBase Value * (see below)Odometer reading 1.4.15? (or at purchase date if during the 2016 FBT year)???Odometer reading 31.3.2016(or at disposal date)???Total Kms Travelled???Disposal Date (if sold)???Consideration Received??????????????????????????? $$$Days not available for private use (eg being repaired)???Expenses paid by employee and not reimbursed$$$Purchase cost (please forward purchase and finance documents) $$$^ If car was used by more than one employee indicate the period of days used by each employee.* The base value of the car (being the cost price) is calculated using the following:- GST inclusive original cost or the leased value of the car (if under a lease arrangement)- GST inclusive cost of non-standard accessories added at and after acquisition. A one-third reduction is available where the car is held by the employer for more than four full FBT years.?GST INCLUSIVESECTION BVehicle 1(GST inclusive)Vehicle 2(GST inclusive)Vehicle 3(GST inclusive)Has Log book been kept?No > No further details requiredNo > No further details requiredNo > No further details requiredYes ↓ Please complete the scheduleYes ↓ Please complete the scheduleYes ↓ Please complete the schedule% of Private use (as per log book)???Registration????????????????????????????????????? $$$ Date???CTP Insurance???????????????????????????????? $$$Date???Insurance??????????????????? ??????????????????????$$$Date???Fuel & Oil????????????????????????????????????????? $$$Repairs & Maintenance?????????????????? $$$Lease payments?????????????????????????????? $$$Other????????????????????????????????????????? $$$Date???????NOTE: - If a vehicle had more than one driver, please discuss this with us?? - Please record the GST inclusive value (if applicable) for each item above.???Form 2a?Operating Cost (Log Book) Method Checklist?Car registration number?????Name of usual driver of car (if any)?????1.?????????????????? ?A log book must be kept for each vehicle using the operating cost method. A new log book must be prepared at least every five years, or if there has been a substantial change in the use of a vehicle. Employers that last kept a log book in the FBT year ended 31/3/2011 or an earlier year were required to keep a new log book in the FBT year ended 31/3/2016. ?2.????????????????? ?Check the log book was maintained over a continuous period of at least 12 weeks plus odometer readings for that period.?3.?????????????????? ?Ensure the following details are recorded in the log book:????????? When the log book period begins and ends????????? The car’s odometer readings at the start and end of the period????????? The total number of kilometres the car travelled during that period????????? Certain details related to each business journey, as follows:?????????? The dates on which each journey began and ended?????????? The kilometres travelled, andThe purpose of each journey (note: an entry merely indicating “business” or “miscellaneous business” will not be sufficient)?4.?????????????????? ?Ensure odometer records are maintained showing the car’s odometer readings at the start and end of the 2016 FBT year.?5.?????????????????? ?Make a reasonable estimate of the number of business kilometres travelled (in determining the car’s business use percentage), taking into account:????????? The information contained in the log book and odometer records, and????????? Any variations in the pattern of use of the car related to, for example, the changing of jobs, a variation in employment duties, holidays, seasonal fluctuations, the employer relocating to another address, etc.???????Form 3Expense Payments BenefitsDateNature of Expense(e.g. school fees, private insurance)Amount (GST Exclusive)GSTName of EmployeeOtherwise Deductible Amount*???????*This is the amount the employee would have been able to claim as a tax deduction, if the expense had not been paid by their employer.?FORM 4Entertainment and Recreation Expenses?Depending on the circumstances, entertainment expenses incurred maybe treated as:????????? Not deductible and not liable to FBT; or????????? Tax deductible and liable to FBT?The determining factors are:???????Where the entertainment took place; and????????Who were the attendees (employees and associates, clients)?Please provide the following information regarding all entertainment expenses paid from 1 April 2015 to 31 March 2016.?GST INCLUSIVEDate of PaymentAmountType of Entertainment(e.g. meals, tickets to sporting events, accommodation. or travel connected with entertainment)Location/VenueAttendeesGST ExclGST Incl.No. & name* of employeesNo. of AssociatesNo of clientsOwner (self employed)?????????????????????????????????????????????*Names are only required for recreation benefits such as tickets to events (not corporate box), corporate golf day etc.?Note that if you are able to provide you with details of the FBT treatment of most entertainment and recreation expenses. Please contact our office should you require further information.? ................
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