More FBT exemptions for small business hoped to incentivise retraining

8 October 2020

In the Federal Budget 2020/21, the Government announced a Fringe Benefits Tax (FBT) exemption for employers providing retraining and reskilling benefits to redundant, or soon to be redundant, employees where the benefits may not be related to their current employment.

The FBT exemption will take effect from 2 October 2020 and allows for a broader range of retraining and reskilling benefits, incentivising employers to retrain redundant employees to prepare them for their next career. It can also assist employers with potential redeployment elsewhere in its existing business.

Previously, FBT was exempt where an employer provided training to redundant, or soon to be redundant, employees and the training had sufficient connection to their current employment. The new exemption will mean employers can claim an FBT exemption when providing retraining or re-skilling benefits that is not related to their current employment for employees whose roles are being made redundant.

However, the FBT exemption will not extend to retraining acquired by way of a salary packaging arrangement or training provided through Commonwealth supported places at Universities.

Taking effect from 1 April 2021, the Government also announced the following FBT exemptions that currently apply to small business employers with aggregated turnover of less than $10 million, will be extended to those with aggregated turnover of up to $50 million:

  • Car parking: This exemption will typically apply to parking provided on an employer’s premises. It is important to note the exemption does not apply in the case of parking provided at a commercial parking station, and it will also not apply to employers that are public companies (including their subsidiaries) or government bodies.
  • Work-related portable electronic devices: Multiple work-related portable electronic devices, such as laptops, tablets and mobile phones, that are provided to employees in the same FBT year (and having substantially identical functions) will all be exempt from FBT. This will allow employers to provide its employees with additional portable technology to support a flexible working environment.

Further, from 1 April 2021, the Commissioner of Taxation will be provided with powers to allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records, to finalise their FBT returns.

Currently, the FBT legislation prescribes the form that certain records must take and forces employers, and in some cases employees, to provide additional records and declarations to ensure the employer is complying with its FBT obligations. This measure will hopefully reduce compliance costs and an administrative burden for employers.

For more information on the changes announced to FBT in the Federal Budget 2020/21, talk to your adviser or contact the Findex Tax Advisory team.

For more Federal Budget coverage and news as it comes to hand, visit our Federal Budget Resource Centre.