Income tax law changes due to employees working from home.
COVID-19 has accelerated the working from home movement for many businesses fortunate enough to be able to work through the pandemic. What was once an option for certain people that comes under the umbrella of flexible work policies has suddenly become the norm for the time being. This has raised a variety of issues related to Occupational Health and Safety, productivity and general mental wellbeing. As usual, our income tax laws also need to be considered when employees are working from home and in this instance, we will be looking at Fringe Benefits Tax (FBT).
What is FBT?
Very briefly, FBT is a tax that is paid by an employer for a wide variety of non-cash benefits that are provided to employees for their private use in substitution of wages, or as a bonus. It is generally levied at the top marginal rate of tax, with some concessionary treatment available for ‘rebateable’ employers and Public Benevolent Institutions. These days, FBT is usually factored into an employees overall remuneration package.
What has the ATO been saying about FBT and COVID-19?
The ATO has recently updated some information on FBT and COVID-19 as part of their frequently asked questions on the pandemic and here are the key points.
Working from home
- Provision of laptop, printer or other portable electronic device is usually exempt from FBT, provided the item is primarily used for employee’s employment and that principle continues to apply.
- If you allow use of a monitor, mouse or keyboard otherwise used in the workplace, the minor benefits exemption will most likely apply, or the otherwise deductible rule depending on the value of the items.
- If you provide stationery/consumables or pay for their phone and internet access and it is mainly used for work, then the otherwise deductible rule is likely to apply.
Overall then, payment of some phone/internet and provision of equipment should not attract FBT, provided that the costs relate to the employee’s work duties and do not have private use to them.
Accommodation, food and transport for emergency assistance
If you provide emergency assistance to an employee adversely affected by COVID-19, there will be no FBT if both of the following apply:
- The benefit is emergency assistance to provide immediate relief; and
- That employee is, or is at risk of being, adversely affected by COVID-19
Exempt assistance covers things like expenses for relocation, including flights in or out of Australia, providing food and temporary accommodation due to travel restrictions and benefits associated with an affected employee self-isolating or being quarantined.
This can also apply for fly-in fly-out employees who cannot return to their usual residence when they normally would due to travel restrictions.
Benefits to protect employees from COVID-19
This is for items like protective personal equipment, sanitisers and anti-bacterial spray. The benefits can be exempt as emergency assistance if the employee’s work necessitates such protection, or otherwise the benefits will likely be covered by the minor and infrequent benefit exemption.
Emergency health care
There are limited exemptions available for emergency health care provided to employees. They apply to health care treatment provided:
- By an employee of yours
- On your premises
- At or adjacent to an employee’s worksite
If you pay for ongoing medical or hospital expenses, FBT applies.
If you pay for transporting your employee from the workplace to seek medical assistance, this cost is exempt from FBT.
Providing flu vaccination to employees who are working at home
Flu vaccination is exempt from FBT as preventative healthcare. If employees are provided with a voucher or reimbursement then it will be exempt from FBT, provided that it is available generally to all employees.
Providing testing for COVID-19 to employees
This will be exempt from FBT, as it is workplace medical screening and COVID-19 is highly infectious. The testing can be done prior to employees entering the workplace. The testing much be carried out by a legally qualified medical practitioner or nurse and must be available to all employees (not all employees need to be tested for the exemption to apply though).