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FRINGE BENEFITS TAX AMENDMENT REGULATIONS 2000 (NO. 1) 2000 NO. 40
EXPLANATORY STATEMENTSTATUTORY RULES 2000 No. 40
Issued by authority of the Assistant Treasurer
Fringe Benefits Tax Assessment Act 1986
Fringe Benefits Tax Amendment Regulations 2000 (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.
The regulations amend the Fringe Benefits Tax Regulations (the regulations) to prescribe certain benefits to be "excluded fringe benefits" for fringe benefits tax (FBT) reporting purposes.
Following recent changes to the Fringe Benefits Tax Assessment Act 1986 (the Act), all employers are required from the 1999-2000 FBT year of tax, to report fringe benefits on their employees´ group certificates. However, subsection 5E(3) of the Act lists certain fringe benefits which do not need to be attributed to individual employees and reported on group certificates. These benefits are referred to as 'excluded fringe benefits' and currently include meal entertainment and car parking fringe benefits. The Act also provides scope for other fringe benefits to be excluded in the future by way of regulation. At present, there are no excluded fringe benefits specified within the existing regulations.
The regulations implement the Government's recent decision to exclude other fringe benefits from the FBT reporting arrangements. One exclusion applies in the case of fringe benefits arising from the payment or reimbursement of emergency and essential health care costs incurred by Australian resident employees, or their associates who are also Australian residents, while the employee is serving overseas. However, this exclusion only applies where the health care services are not already covered by the Australian Medicare system - the rationale being that Australian residents remain liable for the Medicare levy while they are employed overseas, even though Medicare does not cover medical costs incurred abroad.
Another excluded fringe benefit prescribed by the amended regulations relates to a benefit that arises from the payment of a Commonwealth overseas living allowance to an employee. Any of the following components comprising the allowance will not be reported on an employee's group certificate:
* the cost of living adjustment;
* the post adjustment;
* the child supplement;
* the child reunion supplement;
* 50% of the general adjustment.
This exclusion only applies in cases where the overseas living allowance is paid by the Commonwealth, a Commonwealth authority or a Commonwealth company to an employee serving at an overseas post.
In recognition of the unique conditions of military service, the following fringe benefits also will not need to be reported on group certificates when provided to members of the Defence Force who are subject to the Defence Force Discipline Act 1982 and reside within the Commonwealth or any of its territories:
* a housing fringe benefit;
* a fringe benefit to the extent that it relates to the payment or reimbursement of an accommodation expense in the form of rental assistance;
* a fringe benefit to the extent that it relates to reunion travel provided to Defence Force members who are serving in Australia away from their dependants;
* a fringe benefit to the extent that it relates to special needs assistance provided to Defence Force members and their families, in accordance with the Defence Instructions (General) that are in force at the time the regulations commence.
* a fringe benefit to the extent that it relates to either of the following:
(A) Education assistance for children of Defence Force members who are in a 'critical school year' and continue their education away from where the member is serving. Defence Determination 2000/1 sets out the education assistance that is available where a member is moved to a new posting and his or her child attends school at the former locality of posting or at another locality approved by the Chief of the Defence Force (CDF). The Determination also defines 'critical school year' to be years 10, 11, and 12 or any other school year that the CDF determines to be critical to the child's education.
(B) Travel for the child to be reunited with the member, or other dependants of the member, at the locality where the member is serving.
* a fringe benefit to the extent that it relates to removal and travel expenses of the member's non-service spouse and any of his or her accompanying dependants, in the event of a breakdown of marriage.
The amendments will ensure that the excluded fringe benefits listed in the regulations will not be reported on an employee's group certificate and, therefore, will not be taken into account when determining the individual's eligibility for certain government payments and concessions or liability for certain tax surcharges and obligations, such as child support.
The revenue impact and compliance cost savings arising from not having to report overseas medical costs on employee's group certificates are not expected to be significant. The total cost to revenue resulting from the exclusion of overseas living allowances and certain Defence benefits is estimated to be $10 million for each of the 2000-01, 2001-02, 2002-2003, and 2003-04 financial years. The exclusion of various allowances provided to ADF personnel is expected to result in compliance cost savings consisting primarily of the time saved through not having to report the benefits on around 40,000 group certificates. Similarly, the exclusion of the 5 components of overseas living allowances will enable compliance cost savings to be realised by Commonwealth agencies and entities that have officers posted overseas, however these savings are expected to be relatively small.
The regulations apply to group certificates issued for the year of income ended 30 June 2000 and all later years.
The regulations commenced on gazettal.