IPA calls out shortcomings of FBT net

Out-dated and old-fashioned rules are seeing bus catchers benefit over workers using other modes of public transport, with salary package bus travel slipping through the fringe benefits tax (FBT), according to the Institute of Public Accountants (IPA).

IPA chief executive officer, Andrew Conway, said that the loophole was a benefit for bus catchers, but did not bode well for workers who used other methods of public transport, and demonstrated the inconsistencies of the FBT.

"This ruling allows a person to salary package bus travel… normally for taxation purposes, this travel is considered private," he said.

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"However, this ruling confirms the anomaly, providing a tax break relating to bus transport whereas such a benefit does not apply to any other form of public transport."

Conway said that a bus did not fall within the definition of a car under FBT definitions, but those who relied on trams, trains and ferries did not qualify for the salary packaging benefit. Conway said the IPA had called for an overhaul of the FBT rules in the past, which it deemed unsuitable.

"It is an inconsistency within the tax regime that does not sit well… in a world where we are trying to encourage the use of public transport for congestion and environmental reasons, it is hard to justify this outcome," he said.

"[The] rules are well past their use by date and no longer reflect modern work practices."

Conway said FBT was the most difficult and expensive tax for employers and that small efforts to address issues surrounding it had not stemmed ongoing issues.

"The approach has been that of band-aid fixes which has not addressed the complexities associated with FBT," he said.

"This ridiculous outcome is just the tip of the iceberg when it comes to FBT."

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