Newsletter
April 2013 Newsletter
In-house fringe benefits - rule changes on the way
The Government has recently said that the existing fringe benefits tax (FBT) concessions in the law were not intended to allow employees to purchase goods and services (usually sold by the employer to the public) from their pre-tax income through salary packaging arrangements. According to the Government, these employees are receiving tax-free, non-cash remuneration benefits for goods and services, while other employees who do not have access to such salary packaging arrangements must pay for the goods and services from their after-tax income.
The Government has introduced a Bill into Parliament in order to deal with this issue. It proposes to remove the concessional treatment for such “in-house fringe benefits” accessed by way of a salary packaging arrangement.
If implemented, the changes will apply to all salary-sacrifice arrangements entered into on or after 22 October 2012. For pre-existing arrangements, the new measures will not apply until 1 April 2014 – but the renewal of, or changes to, an arrangement will trigger the new provisions.
TIP: This proposed change means that employees will lose their ability to pay for in-house benefits with pre-tax salary without their employer incurring FBT.
However, it is essential to note that the concessional treatment of in-house benefits will be retained where the benefits are not provided via salary sacrifice. If you have any questions, please contact our office.