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Submission No. 245 Back to full list of submissions
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16 April 1999

 

Mr Robert Puckeridge
Review of Business Taxation
10 National Circuit
BARTON ACT 2600

BY FACSIMILE NO: (02) 6263 4352

 

Dear Sir

RPC COMMENTS ON RALPH COMMITTEE RECOMMENDATIONS AND ITS IMPLICATIONS ON THE TAXATION OF EMPLOYEE SHARE TRUSTS

Remuneration Planning Corporation Pty Ltd (RPC) support the Australian Employee Ownership Association’s, Tax & Economics Committee’s recommendations that all employee share plan trusts be excluded from the proposed "business entity taxation regime" recommended by the Ralph Committee.

FRINGE BENEFITS TAX

RPC strongly recommend that the current system of FBT, whereby the employer is primarily liable for the payment of Fringe Benefits Tax should remain with the employer.

RPC support the proposal to exempt car parking. Car parking has been an extremely vexatious and messy issue which has oscillated from full FBT, tax exemption, partial exemption and continues to be a headache for business.

Virtually all taxation systems throughout the world treat the taxation of car fringe benefits on, what could be argued to be a concessional basis. However, this "concession" has been reduced in Australia over the years. In line with international practice RPC recommend that the current system of concessional and tiered taxation treatment of car fringe benefits should be retained.

Traditionally, prior to the FBT, the ATO or audit teams have often dealt with untaxed fringe benefits by denying the company a tax deduction, rather than seeking to assess its employees on individual bases.

At a practical level, employers have learnt to live with FBT. Apart from the "paper" burden of declarations and annoying anomalies in messy claims such as taxis and car parking etc. there has been a general employer acceptance of FBT. The FBT system has been in place for nearly thirteen years. Employers have invested time and money in implementing accounting and administration systems to deal with their employees’ fringe benefits and tax liabilities.

In any event, although the FBT remittance obligations remain with the employer, under the Total Employment Cost or total Remuneration based systems, the Fringe Benefits Tax paid in respect of individuals remuneration packages, are fully costed to the respective employees.

Of course, fringe benefits provided outside of employees’ individual remuneration packages, as job facilities (ie. costs of doing business), should be accounted for, and paid by, the employer. This may include work-related entertainment, car expenses, fines, legal fees and benefits provided outside of the employer’s business premises.

The Ralph Committee’s recommendations in respect of FBT appear ill considered and inappropriate. RPC strongly recommend that the current system of FBT, whereby the employer bears prime responsibility for its payment, should be retained. However, we do sympathise with the need to exempt or at least simplify car parking fringe benefits.

Yours faithfully

 

GARY FITTON
Director