How do Clubs get caught in the FBT net?
The club industry is commonly exposed to compliance risk in the area of Fringe Benefits Tax (FBT). Historically the Australian Taxation Office has been successful in capturing many taxpayers for noncompliance with FBT during audits and reviews.
Common FBT issues faced by clubs are:
Car parking
Car parking spaces provided to employees are subject to FBT where a commercial car parking station is located within 1km of the club’s car parking entrance. Employees parked for more than four hours between 7am and 7pm will be subject to FBT. Care must be taken where two employees have parked in the same parking space during the day (i.e. between 7am and 7pm) for more than four hours (i.e. one during the morning and the other during the afternoon), that both employees are captured for FBT even though there is only one parking space.
In-house gyms
Gym facilities provided to employees at the club’s premises may be exempt from FBT. This is where the gym is provided as a recreational facility or the use of the gym is directly used as part of the club’s operations.
Pooled cars
Reduce the taxable value of cars that are used by several employees by ensuring relevant log books and business-use records are kept. If these documents are not kept properly maintained, the highest taxable percentages will be used therefore increasing the FBT burden of the club.
Club uniforms
Clubs will need to ensure an effective “compulsory” uniform policy is in place and is strictly monitored and enforced, otherwise the uniforms may be subject to FBT.
Entertainment
Club functions involving food and drinks may be exempt from FBT by simply arranging the functions to be held on the club’s business premises. However, this is only in limited circumstances.
For functions that are not held on the business premises, clubs may take advantage of using the minor and infrequent exemption for FBT. But, again, care must be taken when using these exemptions because they are not as generous as those provided to non-club employers.
Article supplied by PKF. |