Notice of Rulings, Notice of Addendum

Overview

The Commissioner of Taxation has released a series of rulings and an addendum to existing rulings, all published in 2018, to provide clarity on various aspects of fringe benefits tax (FBT) and income tax. These rulings address issues such as the indexation factors for non-remote housing, benchmark interest rates, reasonable amounts for food and drink expenses for employees receiving a living-away-from-home allowance, rates for calculating the taxable value of the private use of motor vehicles other than cars, the exemption threshold, and the taxation consequences of changing the portfolio structure, contributing to and partially redeeming an investment in a unit in the Perpetual WealthFocus Investment Advantage Fund. The rulings were issued by the Commissioner, Chris Jordan, and are aimed at ensuring taxpayers understand their obligations and rights under the law. The rulings apply to specific FBT and income tax years, as detailed in each respective notice.

Scope and Application

The Commissioner of Taxation's rulings as published in Gazette C2018G00234 provide detailed guidance on various aspects of fringe benefits tax (FBT) and income tax for specific circumstances and periods. For the FBT year commencing 1 April 2018, these rulings clarify the indexation factors for non-remote housing, the benchmark interest rate, reasonable amounts for food and drink expenses for employees receiving a living-away-from-home allowance, rates for calculating the taxable value of the private use of motor vehicles other than cars, and the exemption threshold. These rulings apply directly to employers and entities involved in fringe benefits transactions for the specified FBT year. Additionally, Ruling CR 2018/13 addresses employers who participate in the Eclipx Group's bus travel benefit scheme, applying from 1 April 2017 to 31 March 2023. Product ruling PR 2018/4 pertains to the taxation consequences of altering the portfolio structure, contributing to, and partially redeeming an investment in a unit in the Perpetual WealthFocus Investment Advantage Fund, applying prospectively from 1 July 2018 to 30 June 2021 for a specified class of entities. An addendum to PR 2015/4, concerning the tax consequences of changing the portfolio structure, contributing to, and partially redeeming an investment in a unit in the Perpetual WealthFocus Investment Advantage Fund, was published on 8 April 2015, providing further clarification on new scheme documents and the Fund's election into the Attribution Managed Investment Trust regime. These rulings and addenda extend or restrict the application of the relevant tax laws through subordinate instruments.

Key Provisions

The Commissioner of Taxation has issued a series of rulings and an addendum that address various aspects of fringe benefits tax (FBT) and income tax. These rulings are available for review on the Australian Taxation Office (ATO) website. For the FBT year commencing 1 April 2018, TD 2018/1 (paragraph 3) sets out the indexation factors for valuing non-remote housing, TD 2018/2 (paragraph 4) specifies the benchmark interest rate, TD 2018/3 (paragraph 5) provides the reasonable amounts for food and drink expenses incurred by employees receiving a living-away-from-home allowance, TD 2018/4 (paragraph 6) outlines the rates for the private use of a motor vehicle other than a car, and TD 2018/5 (paragraph 7) details the exemption threshold. These rulings are applicable to the FBT year starting on 1 April 2018. The obligations under these rulings require employers to correctly apply the specified indexation factors, benchmark interest rates, reasonable amounts, and exemption thresholds when calculating fringe benefits tax. For instance, under TD 2018/1, employers must use the correct indexation factors to value non-remote housing for FBT purposes. Similarly, TD 2018/2 requires employers to apply the specified benchmark interest rate for interest-free or low-interest loans provided to employees. Employers must also ensure that the amounts spent on food and drink expenses for employees receiving a living-away-from-home allowance fringe benefit are reasonable, as outlined in TD 2018/3. Failure to comply with these rulings can result in penalties and other consequences. Under the Fringe Benefits Tax Assessment Act 1986, non-compliance can lead to penalties, including interest on the unpaid tax and potential prosecution. The maximum penalties can be significant, depending on the nature and extent of the non-compliance. For instance, knowingly or negligently providing false or misleading statements can result in penalties up to the greater of $5,250 or three times the amount of the FBT that should have been paid. CR 2018/13, which applies from 1 April 2017 to 31 March 2023, sets out the Commissioner’s position on employers who are clients of Eclipx Group Limited, FleetPlus Pty Limited, and Fleet Partners Pty Limited that provide a smartcard to their employees to facilitate travel on buses between the employees' places of residence and their places of employment. This ruling ensures that the fringe benefits tax implications of such travel benefits are correctly applied. PR 2018/4, which applies prospectively from 1 July 2018 to 30 June 2021 for the specified class of entities, outlines the taxation consequences of changing the portfolio structure, contributing to, and partially redeeming an investment in a unit in the Perpetual WealthFocus Investment Advantage Fund. The addendum to PR 2015/4, applicable from 8 April 2015, amends the original ruling to incorporate the issue of new scheme documents and the Fund’s election into the Attribution Managed Investment Trust regime.