Re: Recent Changes for Salary Packaged Entertainment Benefits

FBT 2016

Precedent letter for FBT-rebatable and FBT-exempt employers – advising of the changes to salary packaged entertainment

The following is a sample letter that an FBT-rebatable or FBT-exempt employer may use to advise employees of the changes affecting salary packaged meal entertainment and EFLE benefits from 1 April 2016 (i.e., from the 2017 FBT year).

Dear [insert name of employee],

Re: Recent changes for salary packaged entertainment benefits

Our records show that you are currently salary packaging entertainment benefits made up of [insert the types of entertainment benefits], to the total value of [insert dollar value if appropriate], during the 2016 FBT year (i.e., from 1 April 2015 to 31 March 2016).

The government has recently made changes to how salary packaged entertainment benefits are dealt with for fringe benefits tax (‘FBT’) purposes, and the changes apply from 1 April 2016 (i.e., from the 2017 FBT year). These changes include the introduction of a new $5,000 cap on the value of concessionally taxed entertainment benefits that can be provided to you in an FBT year. This new $5,000 cap will apply in addition to the existing cap of [insert $17,667 or $31,177, as appropriate] that applies to fringe benefits provided to you by us.

These recent changes may have the effect of increasing the FBT payable by us on your benefits. Any increased FBT liability for uswill be recovered from your pre-tax salary income, resulting in an increase in the amount of pre-tax salary income you may need to sacrifice in return for the benefits provided to you.

As a result, we may need to make adjustments to the value of your existing salary packaged entertainment benefits, so that there is no additional FBT liability for us and no additional cost to you by way of a further reduction in your pre-tax salary income, from 1 April 2016.

In addition to the above, the government has also made changes to the FBT payment summary reporting rules to ensure that salary packaged entertainment benefits provided from 1 April 2016 are generally reported on an employee’s payment summary for the corresponding income year (assuming the total value of reportable benefits provided to you exceeds $2,000).

This may affect your entitlement to claim, or your liability for, a range of tax or non-tax concessions or obligations, such as the following:

Deductions for personal superannuation contributions;
The tax offset for superannuation contributions made for the benefit of a spouse;
Certain other tax offsets (e.g., the Senior Australians Tax Offset and the Pensioner Tax Offset which, from 1 July 2012, were combined to form the Seniors and Pensioner Tax Offset);
The Medicare levy surcharge for employees who do not have sufficient private health cover;
HELP (formerly HECS) repayments; and
Child support, certain Centrelink payments, paid parental leave and other benefits.

Can you please contact [insert name of authorised person on behalf of the employer] on [insert contact number] to make an appointment to review and discuss your salary packaging arrangement, to determine whether an adjustment is necessary to your existing salary packaging arrangement by 31 March 2016.

Kind Regards,

[Insert name of authorised person]

On behalf of [insert name of employer]