Fringe Benefits Tax Amendment Regulations 2001 (No. 1) 2001 No. 36
EXPLANATORY STATEMENT
STATUTORY RULES 2001 No. 36
Issued by authority of the Assistant Treasurer
Fringe Benefits Tax Assessment Act 1986
Fringe Benefits Tax Amendment Regulations 2001 (No. 1)
Section 135 of the Fringe Benefits Tax Assessment Act 1986 (the Act) provides that the Governor-General may make regulations for giving effect to the Act.
Employers are required to report fringe benefit amounts of more than $1,000 on their employees' payment summaries. However, for equity and compliance cost reasons, subsection 5E(3) of the Act identifies certain fringe benefits that do not need to be reported. These benefits are referred to as 'excluded fringe benefits'. Paragraph 5E(3)(i) provides that certain fringe benefits may be excluded by way of regulation.
Subregulation 3B(5) of the Fringe Benefits Tax Regulations 1992 (the Regulations) already prescribes, as excluded fringe benefits, various fringe benefits provided to members of the Defence Force.
In accordance with the Government's decision, the Regulations are amended to prescribe, as excluded fringe benefits, certain benefits provided to Australian Defence Force (ADF) members. These benefits relate to the removal and storage of household effects as a result of relocations within the same locality, occurring at the direction of the Department of Defence. Such Defence-directed removals are common, due to the unique nature of military service, including the need for frequent and compulsory relocations of personnel to meet ADF operational requirements.
As a result, these benefits will not be taken into account when determining an individual's eligibility for certain government payments or concessions, nor when determining certain tax liabilities, such as the medicare levy and superannuation surcharges.
The Regulations will not apply to benefits exempt by virtue of section 58B of the Act. Section 58B provides that where a Defence Force employee is required to change his or her usual place of residence -in order to perform the duties of their employment, the removal and storage of household effects will be exempt from fringe benefits tax. This is provided the removal or storage takes place within 12 months of the employee commencing their duties at the new place of employment.
The Regulations commenced on 1 April 2000. Therefore, removal and storage fringe benefits received by ADF members for Defence-directed moves will not be reported in payment summaries issued for the year of income ended 30 June 20 01 and later income years.
As the Regulations remove the obligation to report these fringe benefits, they benefit ADF members and do not contravene subsection 48(2) of the Acts Interpretation Act 1901. Subsection 48(2) prohibits the retrospective operation of regulations which adversely affect the rights of, or impose liabilities on, a person.
Overview
The Fringe Benefits Tax Amendment Regulations 2001 (No. 1) were enacted to address specific administrative burdens and compliance costs for Australian Defence Force (ADF) members who experience relocations within the same locality. This legislative amendment was introduced by the Assistant Treasurer and is pursuant to the authority granted by section 135 of the Fringe Benefits Tax Assessment Act 1986. The primary objective of these regulations is to exclude certain fringe benefits related to the removal and storage of household effects from the reporting requirements, thereby enhancing equity and reducing compliance costs for ADF members. These excluded benefits will not factor into the determination of eligibility for certain government payments or tax liabilities, such as the medicare levy and superannuation surcharges. The regulations are designed to streamline the tax reporting process for ADF members without contravening the non-retrospective operation of regulations as stipulated in the Acts Interpretation Act 1901.
Scope and Application
The Fringe Benefits Tax Amendment Regulations 2001 (No. 1) pertain to employers and employees, specifically those within the Australian Defence Force (ADF), by amending the Fringe Benefits Tax Regulations 1992 to exclude certain fringe benefits from reporting obligations under the Fringe Benefits Tax Assessment Act 1986. These excluded fringe benefits relate to the removal and storage of household effects for ADF members relocating within the same locality at the direction of the Department of Defence. This exclusion is aimed at reducing compliance costs and ensuring equity, recognising the unique nature of military service and the frequent relocations required by ADF operational needs. The exclusion applies to relocations occurring on or after 1 April 2000, meaning that such benefits will not be reported in payment summaries for income years ending after 30 June 2001. Notably, the Regulations do not apply to benefits exempt under section 58B of the Act, which provides for exemption where relocation is due to a change in the usual place of residence required by employment duties, provided the removal or storage occurs within 12 months of commencing duties at the new location. This legislative amendment ensures that these fringe benefits do not affect the ADF members' eligibility for government payments or concessions, nor their tax liabilities, such as the Medicare levy and superannuation surcharges.
Key Provisions
The Fringe Benefits Tax Amendment Regulations 2001 (No. 1) amend the Fringe Benefits Tax Regulations 1992 to include specific benefits provided to Australian Defence Force (ADF) members as excluded fringe benefits. This means that certain benefits related to the removal and storage of household effects, when relocations are directed by the Department of Defence within the same locality, will not be reported as taxable fringe benefits (subregulation 3B(5)). This change is intended to address the unique circumstances of ADF members who often face frequent and compulsory relocations as part of their service.
These excluded fringe benefits will not affect an individual's eligibility for certain government payments or concessions, nor will they influence the calculation of tax liabilities such as the Medicare levy and superannuation surcharges. It is important to note that this amendment does not apply to benefits that are already exempt under section 58B of the Fringe Benefits Tax Assessment Act 1986. Section 58B exempts the removal and storage of household effects from fringe benefits tax if the relocation is due to a Defence Force employee being required to change their usual place of residence to perform their employment duties, provided that the relocation and associated removal or storage occur within 12 months of commencing duties at the new location.
Employers are relieved from the obligation to report these specific fringe benefits in their employees' payment summaries, thereby easing compliance costs and promoting equity. However, they must ensure that the exclusions align with the criteria set out in the Regulations to avoid any misreporting that could lead to legal consequences. The Regulations commenced on 1 April 2000, meaning that for income years ending on or after 30 June 2001, these fringe benefits will not be included in payment summaries.
Failure to adhere to the provisions of the Regulations could result in civil or criminal penalties. The Fringe Benefits Tax Assessment Act 1986 stipulates various penalties for non-compliance, including fines and, in severe cases, imprisonment. The specific penalties depend on the nature and extent of the breach, with maximum penalties set out in the Act. It is crucial for employers and ADF members to be aware of these obligations and requirements to avoid any potential legal repercussions.