Policy

FBT - Policy

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1. Purpose and Objectives

This policy outlines how the University manages fringe benefits and complies with the relevant taxation laws in relation to Fringe Benefit Tax (FBT).

2. Definitions, Terms, Acronyms

Associate - a family member, relative, partner, spouse or child of an employee, and companies that are effectively controlled by the employee or associates of the employee.

BAS - Business Activity Statement

Employee - someone who receives, or is entitled to receive, a salary or wages in return for work or services provided, or for work under a contract that is wholly or principally for the person's labour. For FBT purposes it is defined to mean a current, future or former employee.

FBT year - the FBT year runs from 1 April to 31 March.

FBT rates - the current FBT rate is shown in FBT - Procedures.

Fringe Benefit - a benefit provided to an employee or their associate in respect of employment.

Fringe Benefit Tax (FBT) - a tax payable by the University on the value of certain fringe benefits that have been provided to their employees or to associates of those employees in respect of their employment.

3. Policy Scope/Coverage

This policy applies to all University staff involved in FBT-related transactions.

4. Policy Statement

All transactions entered into by the University must be analysed to determine the correct application of FBT.

The total cost of providing the fringe benefits must be considered prior to the provision and payment of the fringe benefits.

The UQ FBT Guide and FBT website, located on the FBS website, have been developed specifically for The University of Queensland. These resources provide guidelines and examples in relation to the application of and compliance with FBT legislation. These are to be used as guidance in analysing the correct application of FBT.

The University recognises FBT in accordance with:

  • Fringe Benefits Tax Assessment Act 1986 (FBTAA);
  • Fringe Benefits Tax Act 1986;
  • Fringe Benefits Tax Regulation 1992; and
  • ATO FBT rulings, guidelines, and interpretations.

The University is required to:

  • Record the value of fringe benefits provided to all employees within the FBT year;
  • Obtain a declaration, travel diary, or other relevant supporting documentation to reduce the taxable value of fringe benefits and to substantiate the amount of FBT payable shown on the FBT return;
  • Report and pay the FBT liability to the ATO as part of the quarterly BAS lodgement;
  • Report and pay the FBT liability to the ATO as part of the lodgement of the annual FBT return by 21 May; and
  • Report the grossed-up amount of fringe benefits on the employee's annual payment summary when applicable.

5. Application of FBT

The University is liable to pay FBT on the grossed-up taxable value of all fringe benefits provided to employees or to associates of employees.

Where an employee contributes (from after-tax income, not the salary sacrifice component) to the cost of the benefit, this contribution generally reduces the taxable value of the benefit. However this reduction is not available for entertainment benefits provided by the University.

The University does not accept after-tax contributions from employees for salary sacrificed benefits.

The University must keep adequate records for its self-assessment of FBT liability for five (5) years that shows:

  • The taxable value of each fringe benefit provided to each employee and how it was determined; and
  • The justification of claims for exemptions or concessions that reduce the FBT liability.
Custodians
Chief Financial Officer
Mr Andrew Betts

Procedures

FBT - Procedures

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1. Purpose and Objectives

These procedures outline how the University manages fringe benefits and complies with the relevant taxation laws in relation to Fringe Benefit Tax (FBT).

2. Definitions, Terms, Acronyms

Associate - a family member, relative, partner, spouse or child of an employee, and companies that are effectively controlled by the employee or associates of the employee.

BAS - Business Activity Statement

Employee - someone who receives, or is entitled to receive, salary or wages in return for work or services provided, or for work under a contract that is wholly or principally for the person’s labour. For FBT purposes it is defined to mean a current, future or former employee.

FBT year - the FBT year runs from 1 April to 31 March.

FBT rate - the FBT rate for the FBT year ending 31 March 2018 is 47%.

Fringe Benefit - a benefit provided to an employee or their associate in respect of employment.

Fringe Benefit Tax (FBT) - a tax payable by the University on the value of certain fringe benefits that have been provided to employees or to associates of those employees in respect of their employment.

3. Procedures Scope/Coverage

These procedures apply to all University staff involved in FBT-related transactions.

4. Procedures Statement

All transactions entered into by the University must be analysed to determine the correct application of FBT.

FBT adds to the cost of providing a benefit; hence consideration should be given as to whether the benefit provided is appropriate in the circumstances as well as the total cost of providing the benefit before any expenditure is incurred.

The UQ FBT Guide and FBT website which are located on the FBS website have been developed specifically for The University of Queensland. These resources provide guidelines and examples in relation to the application of and compliance with FBT legislation. These are to be used as guidance in analysing the correct application of FBT.

The University is required to:

  • Record the value of fringe benefits provided to all employees within the FBT year;
  • Obtain a declaration, travel diary, or other relevant supporting documentation to reduce the taxable value of fringe benefits and to substantiate the amount of FBT payable shown on the FBT return;
  • Report and pay the FBT liability to the ATO as part of the quarterly BAS lodgement;
  • Report and pay the FBT liability to the ATO as part of the lodgement of annual FBT return by 21 May; and
  • Report the grossed-up amount of fringe benefits on the employee’s annual payment summary when applicable.

5. Roles and Responsibilities

All employees of the University are responsible for complying with the FBT requirements as set out in the PPL, the UQ FBT Guide, and any other advice or directive issued by the Taxation Unit within FBS. They are also responsible for supporting finance personnel by providing documentation required for FBT purposes.

Any persons initiating or approving the provision of fringe benefits to employees and associates are responsible for analysing and understanding the FBT implications and assessing the total cost of the benefits before they are provided. They are also responsible for ensuring the expenditure complies with UQ's FBT policy and procedures and FBT legislation.

Any persons recording or approving transactions in UniFi, or managing or budgeting expenditure, are responsible for understanding the FBT implications of transactions, assessing the total cost of the benefits provided to employees and applying the correct FBT treatment. Persons recording the transactions are responsible for allocating the expense to the correct FBT account and obtaining and filing the appropriate supporting documentation for FBT purposes.

The HR Division of the University is responsible for:

  • Calculating and collating information for motor vehicle-related fringe benefits. The result of the calculation must be reported to the Taxation Unit of FBS to be included in the annual FBT return;
  • Managing the FBT related to salary/salary sacrifice arrangements;
  • Communicating relevant FBT requirements, changes and implications to the HR community; and
  • Collating information, calculating, and recording reportable fringe benefits for each employee on the employee’s payment summary.

The Taxation Unit within FBS is responsible for:

  • Managing, overseeing, and communicating information related to FBT compliance and application to the University (except for motor vehicle-related fringe benefits);
  • Managing the University's FBT compliance risk;
  • Providing the reportable fringe benefits information for each employee to the HR Division of the University;
  • Collating information, calculating, preparing and lodging the annual FBT return.
  • Processing and paying the quarterly FBT instalments.

6. Fringe Benefits

Fringe benefits are benefits provided to an employee or their associates in respect of employment and may include any right, privilege, service or facility.

Certain benefits are specifically excluded from the definition of fringe benefits, such as:

  • Salaries or wages;
  • Employee share acquisition schemes and share trusts;
  • Superannuation contributions and payments to complying superannuation funds;
  • Eligible termination payments;
  • Payments of a capital nature in respect of restraints of trade and personal injury;
  • Dividends; and
  • Other exempt benefits.

Refer to the UQ FBT Guide for more information on other exempt benefits, fringe benefit tax, the types and benefits which have an FBT implication and examples of how fringe benefits apply to University staff and their associates.

7. Recipient of Fringe Benefits

Refer to the UQ FBT Guide for more information and examples on who is considered to be a recipient of fringe benefits for FBT purposes.

8. FBT Calculation

For most benefits provided by the University, FBT is calculated automatically in UniFi on a monthly basis. For some benefits, FBT is calculated and recorded in UniFi manually by the Taxation Unit within FBS at the end of the FBT year. FBT is calculated using the following formula:

Taxable value x Gross-up rate x FBT rate

Refer to the UQ FBT Guide for more information on the application of the FBT formula and recording of FBT in UniFi.

9. Reportable Fringe Benefits in Employee’s Payment Summary

Where the University provides one or more fringe benefits to the employee during the FBT year and the sum of the taxable value of the fringe benefits provided exceeds $2,000, the University must record the grossed-up reportable fringe benefit amount on the employee’s payment summary for the corresponding income year (1 July to 30 June).

The amount reported on the employee’s payment summary is grossed up using the rate of 1.8868 (for FBT year ending 31 March 2018).

Fringe benefits provided to an associate of an employee are included in the employee’s reportable fringe benefit amount. Benefits that are exempt from FBT may still need to be reported on the employee’s payment summaries.

The following are not reported on an employee’s payment summary:

  • entertainment by way of food and drink, and benefits associated with that entertainment, such as travel and accommodation (regardless of which category is used to value the benefit);
  • hiring or leasing entertainment facilities such as corporate boxes.

Employees must include the reportable fringe benefits in their personal income tax return and the amount is taken into consideration when determining various income tax concessions and entitlement to certain government benefits such as, but not limited to:

  • Medicare levy surcharge;
  • Family tax benefit and child care benefit;
  • Mature age worker tax offset;
  • Deduction for personal superannuation contributions;
  • Tax offset for eligible spouse superannuation contributions;
  • Superannuation co-contribution;
  • HELP and financial supplement repayments; and
  • Child support obligations.

Employees are advised to seek their own external tax advice to determine how reportable fringe benefits will affect their personal income tax. The University is not authorised to manage employees' personal income tax return matters.

Custodians
Chief Financial Officer
Mr Andrew Betts

Forms

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Fringe Benefit Declaration - Form

Fringe Benefit Declaration - Form

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Description: 

This form must be completed when

  • the business portion of an invoice is paid through Corporate Card or Accounts Payable (NOT reimbursement), and
  • the invoice is addressed directly to the employee (not to UQ), and
  • the invoice contains a business and a private portion.  

Refer to UQ FBT Guide section 4.2 for more information.

Custodians
Chief Financial Officer
Mr Andrew Betts
Recurring Fringe Benefit Declaration - Form

Recurring Fringe Benefit Declaration - Form

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Description: 

This form must be completed when

  • the business portion of an invoice is paid RECURRENTLY through Corporate Card or Accounts Payable (NOT reimbursement), and
  • the invoice is addressed directly to the employee (not to UQ), and
  • the invoice contains a business and a private portion.  

Refer to UQ FBT Guide section 4.2 for more information.

Custodians
Chief Financial Officer
Mr Andrew Betts
UQ FBT Guide - Form

UQ FBT Guide - Form

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Description: 

Examples of major benefits provided by The University of Queensland, which attract FBT and their brief explanations int UQ FBT Guide. Due to the complexity of FBT rules and exemptions, it is advisable that the UQ FBT Guide be consulted prior to providing fringe benefits.

Custodians
Chief Financial Officer
Mr Andrew Betts
Custodians
Chief Financial Officer
Mr Andrew Betts
Custodians
Chief Financial Officer
Mr Andrew Betts