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New FBT rates for the 2018/19 FBT year

The ATO has released Taxation Determinations setting out the following rates for the FBT year commencing on 1 April 2018.

FBT:  Benchmark interest rate

The benchmark interest rate for the 2018/19 FBT year is 5.20% p.a., which is used to calculate the taxable value of:

  • a loan fringe benefit; and
  • a car fringe benefit where an employer chooses to value the benefit using the operating cost method.

Example

On 1 April 2018, an employer lends an employee $50,000 for five years at an interest rate of 5% p.a., with interest being charged and paid 6 monthly, and no principal repaid until the end of the loan.

The actual interest payable by the employee for the current year is $2,500 ($50,000 × 5%).  The notional interest, with a 5.20% benchmark rate, is $2,600.

Therefore, the taxable value of the loan fringe benefit is $100 (i.e., $2,600 – $2,500).

FBT: Cents per kilometre basis

The rates to be applied where the cents per kilometre basis is used for the 2018/19 FBT year in respect of the private use of a vehicle (other than a car) are:

Engine capacity Rate per kilometre
0 – 2,500cc 54 cents
Over 2,500cc 65 cents
Motorcycles 16 cents

FBT: Record keeping exemption threshold

The small business record keeping exemption threshold for the 2018/19 FBT year is $8,552.

The ATO has also released Taxation Determinations setting out the indexation factors to value non-remote housing, and the amounts the ATO considers reasonable for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit, for the FBT year commencing on 1 April 2018.

FBT: Living away from home

TD 2018/3 specifies what constitutes a ‘reasonable amount’ of weekly food and drink expenses incurred by employees who are living away from home:

Where total food and drink expenses for an employee do not exceed the Commissioner’s reasonable amounts, those expenses do not need to be substantiated for FBT purposes. Where the employee receives a LAFHA fringe benefit, the employer may reduce the taxable value by the exempt food component where the requisite conditions apply. The Commissioner’s draft view on what constitutes a LAFH arrangement is currently outlined in Draft Taxation Determination TD 2017/D6. While the ruling is expected to have retrospective application, it is unknown whether it will be released prior to the lodgement due date for the 2018 FBT year.

Differing reasonable amounts apply based on whether expenses are incurred in Australia or overseas and based on the number of adults and children present in the host location. The weekly reasonable food and drink amounts for one adult in Australia has increased $18 from $247 in the 2018 FBT year to $265 for the 2019 FBT year.

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