FBT+Concession+Cap

http://www.smartcompany.com.au/finance/tax/47582-don-t-make-a-meal-of-changes-to-fringe-benefit-tax-concessions-for-salary-packaged-meal-and-entertainment-benefits/

In May this year, the federal budget confirmed the government would introduce a grossed-up cap of $5000 per year on the [|FBT concessions] for salary-sacrificed meal entertainment and entertainment facility leasing expenses (meal entertainment benefits) for employees of certain not-for-profit (NFP) organisations (i.e. public and not-for-profit hospitals, public ambulance services, public benevolent institutions – except hospitals – and health promotion charities). Salary packaging is generally an arrangement by which an employee reduces his or her salary and wages in return for receiving a non-cash benefit. Entertainment benefits are those benefits that are meal entertainment benefits (those relating to the provision of meal entertainment) or entertainment facility leasing expense benefits. The FBT treatment of meal entertainment and entertainment facility leasing expense benefits has been reviewed by a number of different inquiries and some changes were bound to eventuate. A 2010 Productivity Commission report observed: //The meal entertainment exemption for public and NFP hospitals was originally introduced because of the difficulty of accounting for the provision of meals to hospital employees when most hospitals had a subsidised staff canteen. However, in recent years it appears that the use of these concessions has grown much wider than the original intent. The salary packaging providers are actively promoting the use of meal entertainment cards for dining and holidays – domestic and overseas …// The FBT cap on exempt benefits provided by NFPs is currently $17,667 for public and not-for-profit hospitals and public ambulance services and $31,177 for public benevolent institutions (except hospitals) and health promotion charities. In addition to the capped exemptions, employees of these NFPs can also salary sacrifice meal entertainment benefits with no FBT payable by the employer. It is these benefits that will now be subject to a separate grossed-up cap of $5000 per year per employee. This is intended to apply from 1 April 2016. All meal entertainment benefits will also become reportable benefits and thus will count towards an employee’s “reportable fringe benefits amount” for an income year. An employee has a reportable fringe benefits amount” if their individual fringe benefits amount for the relevant FBT year (i.e. the FBT year ending on the previous 31 March) exceeds $2000. At present, meal entertainment fringe benefits are “excluded benefits” and therefore are ignored in working out an employee’s reportable fringe benefits amount. The government has now released draft legislation to implement this change. Under that legislation, the law would be amended to introduce a separate single grossed-up cap of $5000 for salary packaged meal entertainment and entertainment facility leasing expenses (entertainment benefits) for employees of public benevolent institutions, health promotion charities and employees of public and not-for profit-hospitals and public ambulance services. Currently, these employees can salary package entertainment benefits (without limit i.e. uncapped) with no FBT payable by the employer and without the benefits being reported.

https://en.wikipedia.org/wiki/Fringe_benefits_tax_(Australia)

== Changes in 2015 [ [|edit]  ]  ==

The Federal Government delivered its 2015-16 Budget [|[6]] on the 12th of May 2015. The Budget included proposed changes to the Meal Entertainment and Holiday Accommodation/Venue Hire benefits with an introduction of an annual Capped amount. Therefore, the proposed changes apply to employees of Public Hospitals and not-for-profit FBT-exempt employers.

Proposed changes are to be effective from 1 April 2016, where these salary packaging exempt benefits will be capped at $2,550 per FBT year ($5,000 grossed up cap divided by the type 2 gross-up rate of 1.9608).

Compare FBT tax and the Income TAX (30% or 15%) for the shareholder

http://www.eclipseaccounting.com.au/meal-entertainment-fbt/