...in the personal and fringe benefits tax systems

A fair tax system should ensure all employees are taxed equally regardless of whether they receive remuneration as wages and salary or as benefits. This is why the fringe benefits tax (FBT) system was introduced by the Hawke-Keating Government in 1986, and why this Government has introduced a number of reforms to better target FBT concessions that are no longer working in the way originally intended.

Ensuring Fbt Concessions Operate As Intended

The Government has announced a number of reforms to better target FBT concessions over the past five years. In its first Budget in 2008, the Government tightened the FBT exemption for certain work-related items (including laptop computers, personal digital assistants and tools of trade) to ensure the exemption only applies where these items are used primarily for work purposes, and that taxpayers can't get a double deduction for expenses. The exemption has also been limited to one item of each type per employee per year. In the same year, the Government amended the treatment of jointly held assets. This re-established the principle that the income and deductions arising from jointly held assets should be allocated between joint owners according to their legal interests.

The Government also removed the FBT exemption for meal cards accessed under a salary sacrifice arrangement, to eliminate the inequity for other taxpayers who have to purchase meals out of their after-tax income.

In the 2011-12 Budget, the Government reformed the statutory formula method for valuing car fringe benefits, by replacing the four rates that depended on the distance travelled throughout the year with a single rate of 20 per cent. This removed the unintended incentive for people to drive their car further than needed, in order to obtain a larger tax concession.

The Government announced reforms to better target the tax concession for living-away-from-home allowances and benefits in both the 2011-12 MYEFO and 2012-13 Budget. These reforms will ensure that the tax concession can only be used for the expenses of people who are legitimately maintaining a second home in addition to their actual home in Australia, for a maximum period of 12 months.

The Government removed the concessional FBT treatment for 'in-house' fringe benefits that are accessed by way of a salary sacrifice arrangement in the 2012-13 MYEFO. This will return the use of this concession to its original intent, before the use of salary sacrificing arrangements became widespread.

Savings in 2016-17 from better targeting FBT concessions