FBT ‘ Recent Developments at a Glance: March 2017
This article alerts you to some NFP sector- related developments over the past month. It deals with matters which have a more specialist nature or matters requiring only brief comment. There is material on Business Benchmarks, FBT – use of tax agents for FBT Returns, accounting for GST where total consideration is not known, accommodation values for GST concession for charities/DGRs, RCTIs for Racing clubs, etc.
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Business Benchmarks – Are you maximising your potential to generate funds for NFP activities?
NFPs that engage in commercial activities in order to raise funds to support their NFP activities can check the performance of their business activities against benchmark data assembled by the ATO. This may be a useful guide in indicating whether your organisation is maximising its funding and as an aid to audit.
ATO tool to ‘calculate and compare the data you entered using the benchmarks to quickly show how your business compares to your competitors’.
FBT – Are you considering having a tax agent deal with your FBT return for 2016-17?
If you are considering engaging a tax agent to lodge your organisation’s 2017 FBT return, you will need to take timely action.
The ATO has advised Tax Agents that they need to ensure that any new FBT clients are added to the particular Tax Agent’s ATO client list by 21 May 2017.
You should also be aware that the ATO has also advised Tax Agents:
‘The due dates for lodgment of 2017 FBT returns for all tax agents are:
- 25 June 2017 if the return is lodged electronically
- 21 May 2017 if the return is lodged by paper.
The due date for payment under the lodgment program remains as 28 May 2017.’
FBT – Lodging your FBT Return directly?
The ATO has noted:
- FBT returns must be lodged by 22 May 2017, unless it has accepted a request for late lodgement or lodgement is made via a registered tax agent.
- Payment of the total FBT amount has to be made by 22 May 2017.
- If your organisation’s taxable amount for the year is nil, and it is registered for FBT, your organisation does not need to lodge an FBT return for the year. Your organisation should complete a Fringe benefits tax – notice of non-lodgment by the time your return is due.
Further information in relation to completing 2017 FBT returns is available.
GST – accounting for GST where total consideration unknown
Circumstances can arise where the total consideration for a taxable supply is unknown at the time at which a supplier has an obligation to account for GST, as this depends on a future event that is not entirely within the control of the supplier (or as the case may be the recipient) of a taxable supply.
This situation will only affect suppliers/recipients which account for GST on an accruals (non-cash basis). Suppliers accounting for GST on a cash basis will remit GST for a tax period only in relation to amounts received (and therefore known) in that tax period. Recipients accounting for GST on a cash basis will claim input tax credits for a tax period only in relation to amounts paid (and therefore known) in that tax period.
Suppliers accounting for GST on an accruals basis prima facie need to remit the total GST for a supply in a tax period in which the supplier receives any of the consideration or (if earlier) issues an invoice for any part of the supply – s. 29-5 GST Act.
The difficulty of accounting for the total GST when only part of the consideration can be identified, has been dealt with in A New Tax System (Goods and Services Tax) (Particular Attribution Rules Where Total Consideration Not Known) Determination (No. 1) 2000 – F2006B11593) – the ‘Old Determination’.
As the Old Determination expired on 31 March 2017, the Commissioner is in the process of registering a new determination – Goods and Services Tax: (Particular Attribution Rules Where Total Consideration is Not Known) Determination 2017 (the ‘New Determination’).
In the New Determination, the general approach of the Old Determination is maintained. However, the change in the phrasing of the New Determination has prompted pause for thought and we intend to further consider its significance. We shall discuss the New Determination in detail in a subsequent newsletter.
Market value of long term accommodation – ATO review:
The ATO website notes that:
‘Accommodation supplied by an endorsed charity or gift-deductible entity is GST-free if the consideration received for the accommodation is less than 75% of market value including GST.’
Since our last newsletter, the ATO has invited feedback on its proposal to retain long-term weekly accommodation benchmark market values for 2015, 2016 and 2017 at the levels previously published. Although the opportunity for feedback technically closed on 31 March 2017, we anticipate prompt feedback would still be considered.
Racing Clubs – Matters currently under ATO consideration:
- Horse Racing Clubs – Legislative Determination RCTI 2017/D10 Draft Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 15) 2017 for Horseracing Clubs – comment sought by 4 April 2017
- Greyhound Racing Clubs – Legislative Determination RCTI 2017/D13 Draft Goods and Services Tax: Recipient Created Tax Invoice Determination (No. xx) 2017 for Greyhound Racing Clubs – comment sought by 4 April 2017
Tax treatment of certain incentive payments to employees
Employers considering providing financial incentives to employees to take up employment with new employers may find the discussion in CR 2017/20 informative.
It specifically deals with tax treatment of payments by the Department of Communities, Child Safety and Disability Services Queensland to employees in order to encourage employees to transition to NDIA employment following NDIA’s assumption of certain responsibility from the Department.
Disclaimer: Information provided in this article, while correct at time of publishing, is subject to change.