Proposed changes to in-house benefits
As part of the mini Budget of November, 2012 the Government announced it would remove the concessional treatment for in-house FBT access by way of Salary Sacrifice arrangements.
This applies to employees who receive goods and services from their employer which are similar to those provided to the employer’s customers in the ordinary course of business. Traditionally the taxable value of those benefits is calculated at 75% of the lowest sale price or value with a further annual $1,000 reduction in taxable value per employee.
Under the new rules it is proposed that this will be treated as an external benefit and the taxable value of these benefits will represent the lowest price; of an identical benefit if the goods or services were sold to the public under a transaction. There will be no reduction applied.
Examples of this have traditionally been seen in the clothing industry and travel industry.
As a result of these changes employers should review any existing employee salary sacrifice arrangement for in-house benefits.
These rules were effective from 22 October 2012.
Please contact Surry Partners for more information.