Covid-19, fringe benefits tax and working from home

Covid-19 has significantly impacted many businesses within Australia and there are several exemptions and concessions available for FBT purposes and working from home. The Fringe Benefits Tax (FBT) season for the year ending 31 March 2022 is coming up very quickly. Now is the time to ensure you have all appropriate records in place to complete your FBT return.

Portable electronic devices

During the pandemic, as an employer, you may have provided employees with items to allow them to work from home. Certain items that are used by employees primarily for work purposes are exempt from FBT. These items include:

  • laptops
  • portable printers
  • other electronic devices

In addition, the minor benefits exemption or the otherwise deductible rule may apply if:

  • You allow an employee to use items they would normally use in the workplace such as a monitor, mouse, or keyboard, or
  • You provide an employee with stationery or computer consumables or pay for their phone and internet access.

The minor benefits exemption may apply for minor, infrequent and irregular benefits provided under $300.

The otherwise deductible rule allows you to reduce the taxable value of benefits by the amount that your employee can claim as a deduction in their personal tax return.

Car Fringe Benefits

Generally, a car fringe benefit will arise where a car owned or leased by an employer is made available for private use by an employee. FBT obligations may be affected if employees have been garaging work cars at their homes due to Covid-19.

Work car garaged at employee’s home and not driven

Where a work car is being garaged at an employee’s home and is not being driven or is only driven as a way of maintaining the car, then the car is not being provided for the purpose of providing fringe benefits to your employee.

If the operating cost method is chosen to calculate the FBT on the use of the car, then there will be no FBT liability in this situation. Odometer records must be kept showing that the car has only had minor use.

If, however the statutory method applies in respect to the car, then an FBT liability will be incurred as the car is garaged at the employee’s home and is therefore taken to be made available for private use under this method.

Work car garaged at employee’s home and driven

If an employee uses a car for business and private purposes and uses the operating cost method to calculate FBT, then the FBT liability may be reduced by taking into account the business use of the car. Under this method, employees must keep logbook and odometer records for the FBT year.

Where an employee has an existing logbook in place, this logbook can still be relied upon for FBT purposes despite changes in driving patterns from Covid-19. You must keep odometer records showing how much the car has been driven during the year, including any lockdown periods.

Where Covid-19 has significantly impacted the driving patterns of employees and the business use percentage on the existing logbook is no longer representative of the use of the car, then an employee can choose to complete a new logbook – even if it is not a year in which an employee is required to keep a logbook (a logbook can be used to calculate FBT for up to 5 years provided it represents the current usage of the vehicle).

Flu vaccinations for employees working from home

Flu vaccinations provided to employees are usually exempt from FBT as they are classed as work-related preventative health care. If employees who are working from home are provided with a voucher or are reimbursed for a flu vaccination, then the benefit continues to be exempt from FBT provided it is made available to all employees (even if not taken up by all employees).

FBT returns for the year ending 31 March 2022 are due for lodgement and payment by:

  • 21 May 2022 if lodging a paper return, or
  • 25 June 2022 if your agent is lodging the return electronically.

More information

For more information on FBT and other exemptions and concessions available please visit the ATO’s website or contact your Bentleys Advisor. 

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.

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