According to a Corporate Tax Association survey of its members, Fringe Benefits Tax (FBT) is a significant compliance burden on taxpayers and is in need of reform. Whilst there have been some compliance safe harbours developed for FBT log books, other areas need legislative reform to reduce the cost of compliance with little cost to the revenue. Some simple fixes would include:
> Allowing for consolidation or grouping for FBT purposes
> Introducing an exemption from FBT for employer provided child care provided at offsite facilities
> More guidance on what amounts to minor and infrequent use in the context of exempt motor vehicles such as utilities. A threshold could be introduced under which, for example, 10% private use (by kilometres) would be considered minor and infrequent use and if you are over the threshold, FBT is calculated on a cents per kilometre basis on the excess.
> Increase the current exempt reportable fringe benefit amount (RFBA) threshold of $2,000 to $4,000. The RFBA has not changed since 2006 (10 years). According to ABS data, over the period January 2007 to December 2016 the Australian CPI has risen by 96.5%. Consideration should be given to increasing the RFBA threshold to $4,000 to reflect the cost of providing benefits has increased since the $2,000 threshold was introduced. The RFBA should also be indexed annually to prevent RBFA bracket creep.
The Board agrees this idea has support within the tax community. The Board will raise this at an appropriate stage but ultimately policy is a matter for Government.