THE dreaded fringe benefits tax has finally caught up with West Perth businesses providing parking bays to their staff. Employers caught by the tax now face an extra cost of about $700 per car bay.
THE dreaded fringe benefits tax has finally caught up with West Perth businesses providing parking bays to their staff.
Employers caught by the tax now face an extra cost of about $700 per car bay.
The FBT has long been regarded as one of the most annoying and complicated taxes.
One of the traditional advantages for businesses located in West Perth was that FBT did not have to be paid on their car parking bays.
That has all changed this year, according to KPMG director employment tax solutions Paul Gerrard.
“We’ve worked with a lot of firms in West Perth who thought they weren’t subject to FBT on car parking,” he said.
“Many employers are probably still not aware that they are liable.”
West Perth firms are liable for FBT because the cost of all-day parking in the area now exceeds the $5.96 threshold set by the Australian Tax Office for the 2003-04 financial year.
Any business located within one kilometre of a commercial parking station that charges $5.96 or more for all-day parking (defined as six hours between the hours of 7am and 7pm) is now liable for GST.
The task of measuring the one kilometre is just one of the complexities of the FBT.
Mr Gerrard said it was defined as the shortest practicable route between the staff parking area and the commercial parking station.
With one-way streets and traffic islands affecting traffic flows throughout West Perth, company accountants could have some fun measuring the ‘shortest practicable route’ to their office parking.
While liability for FBT is based on the maximum all-day parking rate in an area, the amount to be paid is based on the cheapest all-day parking currently available.
Mr Gerrard said KPMG con-ducted an annual survey of parking costs to establish the amount clients had to pay under FBT.
In West Perth, ‘early bird’ parking was available at about $3 per day.
Using a formula of 228 working days per year, this means that most employers in West Perth will now have to pay about $680 in fringe benefits tax for each parking bay they provide to their staff.
For a firm with six staff parking bays, that quickly adds up to more than $4,000.
To complicate matters further, Mr Gerrard said employers were also liable for payroll tax on fringe benefits provided to staff.
Since January last year, payroll tax is based on the ‘grossed up’ value of fringe benefits rather than the pure benefit value, which effectively doubled the amount payable in respect of fringe benefits.Mr Gerrard said employers providing staff parking bays in the CBD, East Perth and Northbridge have been liable for FBT for many years, while employers in Subiaco became liable in 2001-02 for the first time.