In the 2012 Federal Budget, the Government announced that the method of determining the taxable value of airline transport fringe benefits will be changed from stand-by value to market value. The changes are proposed to apply to benefits provided after 7.30pm (AEST) on 8 May 2012.
An airline transport fringe benefit may arise when an employee of an airline or travel agent is provided with free or discounted travel on a stand-by basis. The taxable value is currently the stand-by value of the benefit less any employee contribution.
Stand-by value will be replaced by market value as the concept of stand-by travel is no longer commercially relevant (airlines now use discounted pricing). The taxable value will continue to be reduced by any contribution by the employee.
Treasury on Wed 23.5.2012, advised that exposure draft of the legislation and explanatory memorandum will be available for public consultation “as soon as practicable”.
In the meantime, Treasury reveals that the Government intends to repeal the FBTAA provisions, which currently deal with the treatment of airline transport fringe benefits. The Government intends for airline transport benefits to be treated under the general provisions dealing with “in-house” fringe benefits. Treasury said:
“As stand-by airline travel is no longer provided on a commercial basis, its taxable value under the general provisions dealing with ‘in-house’ fringe benefits will be 75% of its ‘notional value’.
In order to provide certainty and reduce compliance costs, the Government will specify in the Act that the ‘notional value’ of stand-by airline travel is 50% of the lowest publicly advertised economy air fare charged for that particular route during that FBT year.”
COMMENTS can be emailed to: The Manager, Philanthropy and Exemptions Unit, Indirect Tax Division, The Treasury at: fbt@treasury.gov.au.
[LTN 98, 23/5]