Other Reporting Requirements Chapter 4 Other Reporting Requirements Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks 4.1 Luxury Car Tax Luxury Car Tax (LCT) is a tax of 33% imposed on the GST- exclusive value of luxury cars over the relevant LCT threshold. LCT is generally paid when a luxury car is either sold or imported. However, the LCT only applies to supplies of luxury cars by entities registered for GST. It does not apply to unregistered activities such as a private sale. The amount payable is to be completed at field 1E of the BAS statement and if there is an amount to be refunded the amount is completed at field 1F of the BAS statement. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Luxury Car Tax A luxury car is a car with a GST-inclusive value above the LCT threshold ($61,884 for the 2014/15 financial year). Under LCT law, a car is a motor powered road vehicle that is designed to carry: A load of less than two tonnes, and Fewer than nine passengers. It includes: Passenger cars. Station wagons. Four-wheel drive vehicles. Limousines – regardless of the number of passengers they are designed to carry. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Luxury Car Tax Vehicles with fuel consumption below 7 litres per 100 kilometres are considered fuel-efficient cars. The LCT threshold for a fuel-efficient car is known as the “fuel-efficient car limit” which is $75,375 for the 2014/15 financial year and applies to the year in which the supply of the car occurred or the car was used for home consumption. Fuel-efficient cars with a GST-inclusive value below $75,375 are not considered luxury cars. Carry Out Business Activity & Instalment Activity Statement Tasks

(LCT value – LCT threshold) ÷ 1.1 x 33% Luxury Car Tax To work out the LCT amount on the sale of a luxury car, use the following formula: (LCT value – LCT threshold) ÷ 1.1 x 33% The LCT value is the retail price of the car, less any LCT included in the sale and any other Australian tax, fee or charge. The retail price includes GST, customs duty, dealer delivery charges, and standard and statutory warranties. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks 4.2 Fuel Tax Credits Fuel Tax Credits (FTC) provide the taxpayer with a credit for the fuel tax (excise or customs duty) included in the price of fuel used in business activities, machinery, plant, equipment and heavy vehicles. FTCs are administered through the BAS system with the applicable fields being 7D for the FTC and field 7C for any over-claim from a previous period. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Fuel Tax Credits What is an Eligible Activity? FTCs may be claimed for fuel acquired, manufactured or imported for use in business activities. FTCs may also be claimed if you are a: Householder using fuel to generate domestic electricity. Non-profit organisation not registered for GST and operating emergency vehicles or vessels. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Fuel Tax Credits What is Eligible Fuel? diesel, petrol, kerosene, heating oil, and toluene. Fuels that are not eligible for fuel tax credits include: Aviation fuels. liquefied petroleum gas, compressed natural gas, liquefied natural gas, ethanol and biodiesel. Fuels used in light vehicles of 4.5 tonne gross vehicle mass (GVM) or less travelling on a public road. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Fuel Tax Credits Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Carbon Charge Under new Clean Energy laws, from 1 July 2012 fuel tax credit rates have been reduced by a carbon charge for fuels and activities excluding those listed below. Fuels not affected by a carbon charge The carbon charge does not affect the fuel tax credit rates for fuels used in: heavy vehicles with a gross vehicle mass (GVM) greater than 4.5 tonnes travelling on a public road. Diesel vehicles acquired before 1 July 2006 can equal or exceed 4.5 tonnes. specified activities in the agriculture, fishing or forestry industries. activities that do not involve combustion of the fuel - for example, fuel used to clean machinery or as a mould release agent. Or renewable fuels such as biodiesel or fuel ethanol. However, carbon charge was removed from 1/7/2014 Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Fuel Tax Credits Table 1: Fuel tax credit rate changes -– all rates are cents per litre unless otherwise stated The amount of FTCs the taxpayer is entitled to claim depends on how the fuel is used in business activities. The rate for FTCs ranges from 0 cents per litre to 38.6 cents per litre. Table 1: Fuel tax credit rates for taxable liquid fuels, from 1 July 2014 Business use Eligible liquid fuel Rate for fuel acquired from 1 July 2014 Rate for fuel acquired from 10 Nov 2014 In a heavy vehicle* (including emergency vehicles) for travelling on public roads Liquid fuels – for example, diesel or petrol 12.003** 12.46** All other business uses – on private roads, off public roads and non-fuel uses 38.143 38.6 To power auxiliary equipment of a heavy vehicle* travelling on public roads – such as fuel used to power a refrigeration unit or a concrete mixing barrel Carry Out Business Activity & Instalment Activity Statement Tasks

Fuel Tax Credits Working Out Tax Fuel Credits Step 1: Work out how many eligible litres of fuel you have used for each business activity that has a different FTC rate. Step 2: Check what FTC rate applies to each of the business activities. Step 3: Work out the amount of FTCs in dollars by multiplying the number of litres by the relevant FTC rate (Step 1 × Step 2). Step 4: Include the FTC at field 7D of the following Business Activity Statement (BAS). Over-claim: If, in a previous period, too much FTC was claimed an adjustment can be made at 7C of the BAS/IAS. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks 4.3 Wine Equalisation Tax Wine Equalisation Tax (WET) is a value-based tax that generally applies on the last wholesale sale of wine, usually the transaction between a wholesaler and a retailer, and is calculated before GST. WET is paid through the BAS with the applicable fields being 1C for the WET payable and field 1D for any credit that may be due. WET only applies to certain types of products that have an alcohol content of over 1.15%. Specifically grape wine, grape wine products, fruit or vegetable wine, cider, sherry, mead and sake. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks Wine Equalisation Tax To be involved in the WET system, the business must be registered for GST and have a WET business account. If the business makes wine or imports wine for consumption in Australia, or if it is sold wholesale, WET would normally have to paid. Transactions that attract WET are known as “assessable dealings”. Unless an exemption applies, WET is calculated on the taxable value of products sold during assessable dealings at 29% of the wholesale value of the product (before GST is added) or an equivalent value when there is no wholesale sale. Carry Out Business Activity & Instalment Activity Statement Tasks

Wine Equalisation Tax Calculation WET is paid on assessable dealings unless an exemption applies. If the dealing is taxable, WET is calculated on what is known as the “taxable value”. The GST is generally calculated after WET is added to the price of the wine. To calculate WET, the taxable value needs to be calculated and includes the wholesale/distributor sales, taxable retail sales, wine for own use, non-arm’s length sales, and/or some imports. Carry Out Business Activity & Instalment Activity Statement Tasks

Wine Equalisation Tax Calculation Half retail price method Calculate the notional wholesale selling price (that is, taxable value) on retail sales of wine. The taxpayer works out 50% of the retail price (including WET and GST) of those sales and then multiplies that amount by 29%. Average wholesale price method Calculating the weighted average of the prices of the wholesale sales if at least 10% of all sales of grape wine are wholesale sales that are the same vintage and produced from the same varieties or blends as the grape wine to which the dealing relates. Carry Out Business Activity & Instalment Activity Statement Tasks

Carry Out Business Activity & Instalment Activity Statement Tasks 4.4 Fringe Benefits Tax Fringe Benefits Tax (FBT) is a tax on employers that provide non-salary benefits to employees, in connection to their employment. The Fringe Benefits Tax Assessment Act 1986 was introduced because employers were able to use the provision of benefits as a tax deduction, but the ATO missed out on tax because these benefits were not included as assessable income to the employee. Some employees were receiving most of their salary in the form of non- cash benefits to avoid paying income tax. If fringe benefits provided to an employee are over $2,000 for the year, this amount is reported on the employee’s annual PAYG Payment Summary. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Types of Fringe Benefit Car fringe benefits Loan fringe benefits Debt waiver fringe benefits Expense payment fringe benefits Housing fringe benefits Board fringe benefits Airline transport fringe benefits Living-away-from-home allowance fringe benefits Property fringe benefits Entertainment benefits Tax-exempt body entertainment fringe benefits Car parking fringe benefits Residual fringe benefits Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Calculation There are four steps to be followed in calculating FBT: 1. Identify the fringe benefit. 2. Calculate the taxable value of the fringe benefit. 3. Gross up the taxable value of the fringe benefit. 4. Multiply the FBT rate (47% in 2014/15 FBT year, 49% in 2015/16 FBT year) by the grossed-up taxable value of the fringe benefit. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Calculation – Type 1 Fringe Benefits Where GST is included in the employer’s costs of providing a fringe benefit, and the employer is able to claim an input tax credit, the benefit is known as a Type 1 fringe benefit. The value of a Type 1 fringe benefit is grossed up as follows ( 2015/16): Grossed-up value = Taxable value x (FBT rate + GST rate) (1 – FBT rate) x (1 + GST rate) x FBT rate At the current FBT and GST rates, the Type 1 gross-up factor is equal to: Grossed-up value = (0.49 + 0.10) = 2.1463 (1 – 0.49) x (1 + 0.10) x 0.49 Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Calculation – Type 2 Fringe Benefits Fringe benefits that are not Type 1 benefits are known as Type 2 fringe benefits. Benefits will be Type 2 where the cost to the employer of providing the benefit did not include GST or, where GST was charged, the employer was not eligible to claim an input tax credit. A Type 2 fringe benefit is grossed up as follows: Grossed-up value = Taxable value x 1/(1 – FBT rate) At the current FBT rate, the Type 2 gross-up factor is equal to: Grossed-up value = 1/(1 – 0.49) = 1. 9608 Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Considerations when Calculating FBT As per the FBT return form, grossed-up and taxable amounts are presented in whole dollars. For example, $3,000.35 and $3,000.88 both become $3,000. When calculating car fringe benefits, the private use percentage is rounded down for calculations using the Operating Cost method. For example, 54.4% and 54.8% both become 54%. Certain not-for-profit employers can claim a rebate because they do not have a tax return in which they can claim back the fringe benefits tax paid as a tax deduction. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax Fringe Benefits Tax and Activity Statements If a taxpayer has or is going to have a FBT liability, the Activity Statement will have a FBT instalment section. If there is no FBT instalment section on the Activity Statement the ATO will need to be notified and a revised Activity Statement issued. Once issued, the taxpayer is required to complete the FBT instalment section on their IAS or BAS, lodge and pay by the due date. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax F1 ATO Instalment Amount F1 will show an amount worked out by the ATO and is pre-printed on the Activity Statement. The ATO calculates the amount based on the FBT payable from the taxpayer’s last FBT assessment. If using the pre-printed amount at F1 will result in the taxpayer paying more (or less) than the expected FBT liability for the year, the taxpayer can vary it at fields F2, F3 and F4. If the taxpayer decides not to vary the instalment amount, the amount at F1 will be copied to 6A in the summary section of the activity statement. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax F2 Estimated FBT for the Year If the taxpayer chooses to vary the FBT instalment they are required to complete fields F2, F3 and F4. The taxpayer must estimate the total FBT liability for the FBT year ending 31 March and write the amount at field F2. Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax F3 – Varied Amount for the Quarter The taxpayer’s varied amount for the quarterly FBT instalment is calculated using the following formula: (F2 amount x relevant percentage) – (previous instalments less any previous credits claimed). The relevant percentage depends on the FBT quarter in which the taxpayer is varying the instalment amount (the FBT year is from 1 April to the following 31 March). Carry Out Business Activity & Instalment Activity Statement Tasks

Fringe Benefits Tax F4 – Reason Code for Variation When varying a FBT instalment on an activity statement the reason code must be completed at field F4. The taxpayer can choose a reason from the following list that best describes why they decided to vary their instalment amount. Carry Out Business Activity & Instalment Activity Statement Tasks