As part of the mini Budget of November, 2012 the Government announced a reform that it would remove concessional FBT treatment on in-house benefits which are received via Salary Sacrifice arrangements.
This applies to employees who receive goods and services from their employer which are similar to products/services provided to the employer’s customers in the ordinary course of business. Traditionally, these benefits would be taxable at 75% of the lowest sale price or value with additional annual reduction in taxable value of $1,000 per employee.
The new rules dictate that this will be treated as an external benefit and its taxable value is the lowest price of an identical product/service sold to the public. The $1,000 reduction is no longer applicable.
Usually, these benefits are found in the clothing and travel industry.
As a result of these changes, employers are advised to review their existing Salary Sacrifice arrangements and identify the in-house benefits. These rules apply on benefits given on or after 22 October 2012.