The ATO will defer the start date of its controversial revised fringe benefits taxation ruling after bowing to pressure from the profession.
ATO yields on FBT ‘ticking time bomb’
The final version of draft taxation ruling 2019/D5 will now have a start date of 1 April 2021, one year after its original intended start date.
“Recognising that employers will require time to implement these changes following finalisation of the ruling (which may be close to or after 1 April 2020), we have determined that when the final ruling is published, any changes in view from TR 96/26 will apply from 1 April 2021,” the ATO said.
The deferral comes after Chartered Accountants Australia and New Zealand (CA ANZ), CPA Australia and the Corporate Tax Association (CTA) lashed out at the ATO over the draft ruling, noting that its interpretation had diverged from the original policy intent.
The draft TR replaces the now withdrawn TR 96/26, which stood for over 20 years, and differs by proposing to treat a car park that offers all-day parking as a commercial car park for FBT purposes, even though the car park’s fee structure may discourage parking for that length of time by charging a higher fee.
The impact of the change would mean that employers whose staff car parking facilities are both in the vicinity of the workplace, and within one kilometre of such a car park, may have to pay FBT on the taxable value of employees’ car spaces, where they previously did not.
The accounting bodies argue that employers operating in suburban and regional areas may now be captured by a law that was originally intended to address the provision of high-value parking in central business districts.
Speaking to Accountants Daily, CPA Australia general manager of external policy Paul Drum said that while it was pleasing to see the ATO act on advice to defer the changes, the Tax Office still needed to consider the impact on previously unaffected taxpayers.
“This is still a ticking time bomb as there are employers everywhere, particularly in the suburbs and industrial areas of our cities, who may be caught by the ruling, but they don’t know it,” Mr Drum said.
“Our preference remains for the law to be changed so that it reflects the original policy intent. However, until this is achieved, the ATO’s time extension is a positive step in ensuring a practical and well-communicated rollout of the changes.
“Deferring the start date is most appropriate under the circumstances as it provides an opportunity for employers to better understand their potential FBT obligations.”
The ATO notes that it has received a “significant number” of submissions in relation to the draft ruling and will be carefully considering them before issuing its finalised ruling.