August Australia Amends Fringe Benefits Tax Rules and Income Tax by ramhood17

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									                                                                                    August 20, 1999
                                                                                    99-39


Australia Amends Fringe Benefits Tax Rules and Income Tax Rates
by Richard Turner and Kerry Brennan, KPMG Melbourne


calculation of the individual fringe benefits amount for each employee from April 1, 1999.
Previously, employers were only required to determine their liability to Fringe Benefits Tax
(FBT) on a company-wide basis without the need to determine and report the taxable value of
fringe benefits on a per-employee basis. The amendments also require employers to allocate the
total grossed-up value of most fringe benefits to individual employees and disclose this amount
on employees' group certificates for the year ended June 30, 2000, and later years. The reportable
fringe benefits total is taken into consideration for various income tests when determining an
individual’s liability for certain obligations (e.g., surcharges) and eligibility for certain
concessions. Previously, employers could avoid the preparation of group certificates for
expatriates in certain situations by relying on the Provisional Tax system.

Reportable Fringe Benefits Threshold

An employee has a reportable fringe benefits amount for a year of income where the employee's
individual fringe benefits amount for the FBT year ending on March 31 exceeds A$1,000 for that
particular year. The A$1,000 threshold is not pro-rated for benefits provided for part-year
employees during the FBT year.

For example, the following types of benefits may be reportable fringe benefits:

n   “living away from home” allowances;
n   payment of employee’s foreign tax liabilities;
The information contained in this newsletter was submitted by KPMG Melbourne. The information
is general in nature and subject to change. Applicability to specific situations should be determined
through consultation with your tax advisor
n   employer provided accommodation;
n   holiday transport assistance; and
n   provision of free medical insurance.

Exclusions

Certain fringe benefits are excluded from the reporting requirements. Meal entertainment, car
parking, and certain remote-area housing fringe benefits are excluded from the reporting
requirements. Meal entertainment includes entertainment by way of food or drink,
accommodation, travel, or reimbursement of expenses in relation to meal entertainment. Benefits
arising from the reimbursement of private car parking expenses are not covered by the exemption.

Shared Benefits

Where benefits are shared by two or more employees (e.g., pooled motor vehicles), the employer
must reasonably allocate the taxable value between employees and take into account all relevant
factors.

Action

Employers must review their payroll systems to determine their ability to capture the information
that needs to be disclosed on group certificates. This requires interaction between the fringe
benefits tax information gathering system and the payroll system to ensure that the data reconcile
in accordance with the legislation and are reported appropriately.

In addition, employers may need to restructure the manner in which benefits are provided to
employees so as to minimise or eliminate reportable fringe benefits where possible.

Changes to Personal Income Tax Rates
A New Tax System (Personal Income Tax Cuts) Act 1999 (Act No. 69, 1999) reduces personal
income tax rates. Outlined below are the current rates of tax for resident taxpayers and the rates
of tax that will apply from July 1, 2000. The rates below do not include the Medicare Levy or
adjustments in respect of Family Tax Assistance.

Personal Income Tax Rates (Resident Taxpayers)
                   Current Scale                                           New Scale
      Taxable Income (A$)            Tax Rate (%)            Taxable Income (A$)            Tax Rate (%)
0 - 5,400                                  0           0 - 6,000                                  0
5,401 - 20,700                            20           6,001 - 20,000                            17
20,701 - 38,000                           34           20,001 - 50,000                           30
38,001 - 50,000                           43           50,001 – 60,000                           42
50,001 +                                  47           60,001 +                                  47

The information contained in this newsletter was submitted by KPMG Melbourne. The information
is general in nature and subject to change. Applicability to specific situations should be determined
through consultation with your tax advisor
The following table sets out the current rates of tax on the taxable income of a nonresident
taxpayer and the amended rates of tax that will apply from July 1, 2000.

Personal Income Tax Rates (Nonresident Taxpayers)
                 Current Scale                                           New Scale
     Taxable Income (A$)       Tax Rate (%)              Taxable Income (A$)               Tax Rate (%)
0 - 20,700                          29            0 – 20,000                                    29
20,701 - 38,000                     34            20,001 - 50,000                               30
38,001 - 50,000                     43            50,001 – 60,000                               42
50,001 +                            47            60,001 +                                      47




The information contained in this newsletter was submitted by KPMG Melbourne. The information
is general in nature and subject to change. Applicability to specific situations should be determined
through consultation with your tax advisor

								
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