Recent changes for salary packaged entertainment benefits
The government has recently made changes to how salary packaged entertainment benefits are dealt with for fringe benefits tax (‘FBT’) purposes, and the changes apply from 1 April 2016 (ie. From the start of the 2017 FBT year). These changes include the introduction of a new $5,000 cap on the value of concessionally taxed entertainment benefits that can be provided to you in an FBT year. This new $5,000 cap will apply in addition to the existing cap of that applies to fringe benefits provided to you.These recent changes may have the effect of increasing the FBT payable on your benefits. Any increased FBT liability will be recovered from your pre-tax salary income, resulting in an increase in the amount of pre-tax salary income you may need to sacrifice in return for the benefits provided to you.
As a result, it may be necessary to make adjustments to the value of your existing salary packaged entertainment benefits, so that there is no additional FBT liability and no additional cost to you by way of a further reduction in your pre-tax salary income, from 1 April 2016.
In addition to the above, the government has also made changes to the FBT payment summary reporting rules to ensure that salary packaged entertainment benefits provided from 1 April 2016 are generally reported on an employee’s payment summary for the corresponding income year (assuming the total value of reportable fringe benefits provided to you exceeds $2,000.)
This may affect your entitlement to claim, or your liability for, a range of tax or non-tax concessions or obligations, such as the following:
- Deductions for personal superannuation contributions;
- The tax offset for superannuation contributions made for the benefit of a spouse;
- Certain other tax offsets (eg, the Senior Australian Tax Offset and the Pensioner Tax Offset which, from 1 July 2012, were combined to form the Seniors and Pensioner Tax Offset);
- The Medicare levy surcharge for employees who do not have sufficient private health cover;
- HELP (formerly HECS) repayments; and
- Child support, certain Centrelink payments, paid parental leave and other benefits.
If you believe the above changes will affect you or would like further information please contact Michael Franco of our office on 03 8805 8000 to determine whether an adjustment is necessary to your existing salary packaging arrangement by 31 March 2016.