Fringe Benefits Tax – Exempt benefits: training courses or activities provided to employees being made redundant

In the recently released Australian Tax Office (ATO) Interpretative Decision ATO ID 2015/1, the ATO determined that a vocational training and development (worker retraining) program made available to employees who were being made redundant was not an exempt fringe benefit under section 58M of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986). This was on the basis that the training did not relate to any of the prescribed forms of ‘work-related counselling’, as defined in section 136(1) of the FBTAA 1986.

This decision is to be contrasted with an earlier Taxation Determination TD 93/153, which stated that outplacement services provided by an employer to current and former employees were considered to fall within the definition of “work- related counselling” and were therefore exempt benefits. The key differentiating factor in the recent ATO ID was that the training course enabled the employees to acquire new skills, qualifications and accreditations to enhance their future employment prospects. This was in contrast to the earlier determination where the outplacement services assisted the employees to organise their skills and experience in order to obtain satisfactory new employment but did not provide them with new skills, qualifications or accreditations.

Careful consideration should be given to the types of services provided to an outgoing employee, particularly where employment is to be terminated as a result of redundancies, to ensure that the “work-related counselling” exemption is satisfied.

Superannuation and PAYG Withholding – Single Touch Payroll discussion paper released

The ATO has released a discussion paper for consultation on the implementation of a measure announced in December 2014 to cut red tape for employers by simplifying tax and superannuation reporting obligations through Single Touch Payroll.

Under Single Touch Payroll, employers will be required to electronically report payroll and super information to the ATO when employees are paid, using Standard Business Reporting-enabled software. Employee TFN declarations and Super Choice forms will also be streamlined by providing a digital channel to simplify the process of bringing on new employees. Single Touch Payroll will be available from July 2016.

The discussion paper seeks stakeholder views on transitional arrangements, how to minimise implementation and compliance costs, and the potential for employers to remit employee PAYG withholding and super guarantee at the same time employees are paid. Closing date for submissions is 6 March 2015.

Fringe Benefits Tax – Decision Impact Statement: Qantas airport car parking case

The ATO has released a Decision Impact Statement, following the recent decision by Full Federal Court in favour of the ATO in Commissioner of Taxation vs Qantas Airways Ltd [2014] FCAFC 168. In this case, the Court held that the word “public”, for the purposes of the

definition of “commercial parking station” in the FBTAA 1986, should be given its ordinary meaning, and there was no rationale for imputing into the definition a requirement that a commercial parking station be one that employees of the employer would or could use if they commute to work by car.

Despite the contractual restrictions imposed by the operator of the parking stations at Canberra Airport, the car parks were found to be, in the ordinary course of the business, available to any member of the public on the contractual terms stipulated. The contractual terms did not mean that the car parking spaces were not available to members of the public but, rather, that conditions were imposed on the use of the car park by members of the public.

The Decision Impact Statement states that this decision is consistent with the Commissioner’s view and current practices in relation to the interpretation of the world “public” for the purposes of identifying commercial parking stations.

The ATO has committed to reviewing and updating Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits to ensure it is consistent with the Full Federal Court’s decision. The ATO is currently seeking taxpayer feedback on this Decision Impact Statement on or before 16 March 2015.

Payroll Tax – Grouping provisions (NSW)

In Edgely Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 16, the NSW Civil and Administrative Tribunal affirmed the decision of the Chief Commissioner of State Revenue and held that the taxpayer company was carrying on a business for the purposes of the payroll tax grouping provisions. The Tribunal found that Edgely Pty Ltd was correctly grouped with other companies, and, as a result, was jointly and severally liable for payroll tax where members of the group failed to pay payroll tax, notwithstanding that it had no employees of its own.

This decision serves as confirmation that all grouped entities are jointly and severally liable for payroll tax where another member of the group fails to pay their payroll tax liabilities. In addition, the Tribunal agreed with the Commissioner’s interpretation of what constitutes a “business”, finding that the development of property and subsequent leasing of the property to a related company in order to earn regular rental income, would satisfy the extended definition of “business”, being “any activity carried on for fee or reward”.

Payroll Tax – Mid-year budget update includes payroll tax changes (WA)

On 22 December 2014, the Western Australian Government released its mid-year budget update, which updates the May 2014 State Budget financial projections for WA. The mid-year update included changes to the payroll tax exemption threshold for WA. From 1 July 2015, a gradual diminishing of  the payroll tax exemption threshold will be introduced for payroll between the current exemption threshold of $800,000 up to around

$7.5 million. For payrolls of $7.5 million and above, payroll tax will be payable (at the current rate of 5.5%) on an employer’s entire payroll, with no exemption threshold (currently, all payroll tax paying employers are exempt from payroll tax on the first $800,000 of payroll, regardless of their size). This is similar to the approach in Queensland and the Northern Territory.

The WA Government has also decided to defer a scheduled increase in the payroll tax exemption threshold to $850,000, from 1 July 2016 to 1 July 2017.