UNCLASSIFIED / CA2018-006 – new treatment of fringe benefits for calculation of ati and rebate income / Change
advice
business / SOFTWARE DEVELOPERS / advice / UNCLASSIFIED
Segment / audience / Format / Classification
CHANGE Advice
Reference No: / 2018 - 006
Title: / New Treatment of Fringe Benefits for Calculation of ATI and Rebate Income
Version No: / 3.0
Document Date: / 26/09/2017
CHANGE IMPLEMENTATION DATE / 1/07/2017
TAX MEASURE COMMENCEMENT DATE / 1/07/2017
CURRENT STAGE / CONCEPTUAL
HIGH LEVELDESIGN
REQUIREMENTS ANALYSIS
DETAILED DESIGN
LIKELIHOOD / DRAFT
LIKELY
DEFINITE
Channels affectedExternal Tax Software products affected
ELS Fringe Benefits Tax (FBT)
SBR Resource Rent Tax (RRT)
ECI Income tax
eSAT Business Accounting systems
Portal Superannuation Systems
Prefill data Payroll systems
Calculators Corporate enterprise systems ( e.g. finance/ HR)
Paper Forms
Outbound Correspondence
IMPORTANT. Information in this advice is draft only and subject to change. It is provided under the terms and conditions of the ATO Software Developers Homepage(http://softwaredevelopers.ato.gov.au/ ) and noted in the footer below
DEPENDANT LEGISLATION
Budget Savings (Omnibus) Act 2016 – Schedule 15 Fringe Benefits
Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 – Schedule 4 Low income superannuation tax offset
BACKGROUND INFORMATION/POLICY INTENT
In the 2015–16 Mid-Year Economic and Fiscal Outlook, the Government announced changes to the treatment of fringe benefits which, for Tax Time 18, impact the way several income tax tests are conducted.From 1 July 2017, the reportable fringe benefits amounts (RFBA) received by the individuals from employers who are not exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986 (the Act) will not be adjusted down when calculating entitlement to several tax offsets.Section 57A makes reference to individuals performing duties for registered public benevolent institutions, registered health promotion charities, some hospitals and public ambulance services.
There is no change to the treatment of RFBA received by individuals from employers who are exempt from fringe benefits tax under section 57A of the Act. Their RFBA will continue to be adjusted down when calculating entitlement to those tax offsets.
BUSINESS REQUIREMENTS SUMMARY
This change advice is a continuation of CA2017-037. For financial year 2017–18 and onwards,to calculate Adjusted fringe benefits total, theATO will not adjust down the RFBA reported (in individuals income tax return) at the labels that represent employers who are not exempt from fringe benefits tax under section 57A of the Act.
Adjusted fringe benefits total is a component of:
  1. Adjusted taxable income, which is used to work out:
  • Net medical expenses tax offset
  • Dependant (invalid and invalid carer) tax offset
  • Dependant (non-student child under 21 or student) notional tax offset
  • Low income superannuation tax offset
  • Whether your child is considered a dependant for Medicare levy purposes.
  1. Rebate income to determine eligibility for Seniors and pensioners tax offset.
The changes apply to the respective amounts entered in labels W (under IT1 in Income tests section)and S (in the spouse details section) of the individual income tax return.
The same changes apply to ATO’s website / online calculators.
CONCEPTUAL VIEW (High Level Design)
When performing the above mentioned calculations in numbers 1 and 2 under Business Requirements Summary, the RFBA reported at the following two labels will not be adjusted down:
  1. Label W ‘Employers not exempt from FBT under section 57A of the FBTAA 1986’ in item IT1 of the individual’s income tax return
  2. Label S ‘Employers not exempt from FBT under section 57A of the FBTAA 1986’ in spouse details section of the individual’s income tax return.
For Tax Time 18, there aren’t any changes in the manner in which the employers will report the RFBA – these changes have already been made in Tax Time 17.
DETAILED DESIGN
  1. When performing the above mentioned calculations in numbers 1 and 2 under Business Requirements Summary, do not adjust down the figure reported at:
  2. Label W ‘Employers not exempt from FBT under section 57A of the FBTAA 1986’ in item IT1 under Income tests
  3. Label S ‘Employers not exempt from FBT under section 57A of the FBTAA 1986’ in Spouse details section of the individual tax return
  4. No other calculations, apart from those mentioned above in this Change Advice (in numbers 1 and 2 under Business Requirements Summary), are impacted.
  5. No other system processes and calculations in regards to the above mentioned are changing under this project.
  6. When using the amounts reported at labels N and Win the calculation of these tax offsets, perform the calculations separately, for example:

Label N: $4,500 x 0.53 = 2,385 (continue to adjusted down)
Label W: $6,000 (stop adjusting down)
Calculators for the following will require an update:
  • Net medical expenses tax offset–as adjusted taxable income is used to determine the phase-in limit to apply.
  • Dependent (invalid & invalid carer) tax offset
  • Zone and overseas forces tax offset – to allow for changes to the notional tax offset for dependent child or student
  • Rebate income for calculation of Seniors and pensioners tax offset – as the adjusted fringe benefits total is included in rebate income.
  • Low income superannuation tax offset.
If your software provides a calculator for ATI, it will need to accommodate the changes.
  1. No new validation rules are required for Tax Time 18.

Names of Forms impacted:
There aren’t any label changes on the individual’s income tax return and pay as you go payment summaries for Tax Time 18 as these changes have already been made in Tax Time 17.
Individual tax return instructions contain the following, which does not require an update:
  1. Medicare levy
  2. A3 Government super contributions
Individual tax return’s supplementary instructions contain the following, however, at the moment, it does not require any updates:
  1. T4 Zone or overseas forces
  2. T5 Total net medical expenses
  3. T6 Invalid and invalid carer tax offset.

UNCLASSIFIED / This A controlled information resource WHICH is information that is not yet available to the general public, IT is made available to software developers for the sole purpose of assisting in the development of tax-related software (both commercial and in-house).
In some cases the information is in draft form or has been made available for the purposes of consultation, proof of concept work and or pilots.
HOLDERS OF THIS DOCUMENT should not on-forward controlled information to persons or organisations outside THEIR own organisation OR FOR OTHER PURPOSES. See HTTP://SOFTWAREDEVELOPERS.ATO.GOV.AU / PAGE
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