Is a person whom an employer has stood down due COVID-19 an employee for FBT purposes during the period of stand down?
We have had to stand down some employees due to the COVID-19 crisis. If we provide benefits to these employees during the period they have been stood down does FBT arise?
It is our understanding that under the Fair Work Act an employee that has been stood down due to COVID-19 is still regarded as being employed by the employer. The employee definition for FBT operates differently in that it applies to current, future and former employees.
A current employee is a person who receives, or is entitled to receive, salary or wages. Perhaps an employee who has been stood down falls outside this definition. However, we would consider the former employee definition would apply as this refers to a person that has been a current employee.
The bottom line is that the employee who has been stood down would continue to be considered an employee for FBT purposes in our view.
On this basis, benefits provided during the stand down period will be subject to FBT. However, depending on the benefit, a specific exemption/reduction or the otherwise deductible rule may be available to reduce the taxable value accordingly.
This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.
This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.