"earlier December year "means the period of 12 months immediately before the most recent December year.

"index number", for a quarter, means the All Groups Consumer Price Index number for the quarter (being the weighted average of the 8 capital cities) first published by the Australian Statistician for the quarter.

"most recent December year "means the period of 12 months ending on 31 December immediately before the FBT year for which the threshold is being worked out.

Disregard new publications

(6)

If the Australian Statistician publishes an index number for a quarter in substitution for an index number previously published for that quarter, disregard the later publication.

Changed reference base

(7)

However, if the Australian Statistician changes the reference base for the Consumer Price Index, take into account only the index numbers published in terms of the new reference base.

Rounding down to whole dollar amount

(8)

Round the subsection (3) result down to the nearest whole dollar (if the result is not already a number of whole dollars).

Division 3—Consequences if conditions in Division 2 are satisfied
135D Consequences

This Division has the consequences that apply if both conditions in section 135B are satisfied in relation to an employer for an FBT year (the current year ).

135E Exemption from keeping records

(1)

Subsection 132(1) (which requires certain records to be kept and retained) does not apply to the employer in relation to the employer's liability under this Act for the current year.

Records the employer must still keep

(2)

However, subsection 132(1) still applies in relation to the employer's liability under this Act for the current year so far as it relates to the following:

(a)

copies of records that an associate of the employer gives the employer under paragraph 132(2)(b);

(b)

benefits provided at a time when the employer was:

(i)

a government body (see subsection 136(1)); or

(ii)

a person all of whose income is exempt from income tax;

(c)

benefits provided after the Commissioner has given the employer a written notice under this paragraph, during the current year, requiring the employer to resume keeping records.

135F Keeping records for 5 years after they are last relied on

The period in paragraph 132(1)(b) for retaining records relating to the employer's liability under this Act in respect of the employer's most recent base year is extended (or further extended) to 5 years after the end of the current year (if the period is not already that long).

135G Way to work out liability

The employer's liability to pay tax under section 66 is worked out using the employer's aggregate fringe benefits amount for the employer's most recent base year, instead of for the current year.

135H Exception if employer chooses to use current year aggregate fringe benefits amount

Section 135G does not apply if the employer chooses to work out his or her liability using the employer's aggregate fringe benefits amount for the current year.

135J Exception if employer is government body or tax-exempt

Section 135G does not apply if the employer is:

(a)

a government body (see subsection 136(1)); or

(b)

a person all of whose income is exempt from income tax;

at any time during the current year.

135K Exception if aggregate fringe benefits amount increases too much

(1)

Section 135G does not apply if the employer's aggregate fringe benefits amount for the current year is more than 20% greater than it was for the employer's most recent base year (unless the difference is $100 or less).

Example: The aggregate fringe benefits amount was $100 for the most recent base year and $180 for the current year. This is 80% greater—well over the 20% limit. But section 135G can still apply because the difference is only $80.

Special rules for applying this test

(2)

In working out, for the purposes of subsection (1), the employer's aggregate fringe benefits amount for the current year, apply the following rules.

Section 123 disregarded

(3)

Disregard the effect of section 123 (which deals with failing to retain statutory evidentiary documents).

Special rule for car fringe benefits—statutory formula method used in earlier year

(4)

If:

(a)

for the employer's first car benefit year (if any—see subsection (6)), the employer used the method in section 9 (statutory formula) to determine the taxable value of one or more car fringe benefits relating to a particular car; and

(b)

the employer uses the same method for that car, or for a car provided as a replacement of that car, for the current year; and

(c)

the annualised number of kilometres the car (or its replacement) travelled in the current year is at least 80% of the annualised number of kilometres the car travelled in the first car benefit year;

the employer may, in using that same method, use the statutory fraction for the car from the first car benefit year, instead of from the current year.

Special rule for car fringe benefits—cost basis method used in earlier year

(5)

If:

(a)

for the employer's first car benefit year (if any—see subsection (6)), the employer used the method in section 10 (cost basis) to determine the taxable value of one or more car fringe benefits relating to a particular car; and

(b)

the employer uses the same method for that car, or for a car provided as a replacement of that car, for the current year; and

(c)

the business use percentage (see subsection 136(1)) for the current year is not lower than the business use percentage for the first car benefit year by more than 20 percentage points;

the employer may, in using that same method, use the business use percentage for the car from the first car benefit year, instead of from the current year.

Meaning of first car benefit year

(6)

In subsections (4) and (5), the employer's first car benefit year is the first FBT year (if any) in the period:

(a)

beginning with the employer's most recent base year; and

(b)

ending with the FBT year immediately before the current year;

during which one or more car fringe benefits were provided in relation to the employer.

135L Employer not in business throughout current year

(1)

This section applies if the employer does not carry on business operations throughout the current year.

Pro-rata reduction of base year aggregate fringe benefits amount

(2)

For the purposes of sections 135G and 135K, the employer's aggregate fringe benefits amount for the employer's most recent base year is replaced by the amount worked out using the following formula:

3 Section 136AA (at the end of the definition of aggregate fringe benefits amount )

Add:

Note: In certain cases, the employer can instead use the aggregate fringe benefits amount in relation to a previous year of tax: see Part XIA (Record keeping exemption).

Part 2—Application and transitional
4 Application of amendments

(1) The amendments made by this Schedule apply in relation to benefits provided in the FBT year beginning on 1 April 1998 and later FBT years.
(2) However, section 135E of the Fringe Benefits Tax Assessment Act 1986 (as inserted by this Schedule) does not apply in relation to benefits provided before the commencement of this Schedule.

5 Transitional—first base year

(1) For the purposes of Part XIA of the Fringe Benefits Tax Assessment Act 1986 (as inserted by this Schedule), an employer may use the FBT year beginning on 1 April 1996, or any later FBT year, as the employer's first base year.
(2) If the employer uses the FBT year beginning on 1 April 1996 as the first base year, then, in determining whether the conditions in Division 2 of that Part are satisfied for any later FBT year:

(a)

section 135B of that Act is taken to require that the employer's aggregate fringe benefits amount for the FBT year beginning on 1 April 1997 was no more than 20% greater than it was for that base year (unless the difference is $100 or less); and

(b)

that section is taken not to require anything else to be true of the FBT year beginning on 1 April 1997; and

(c)

the test in paragraph (a) of this subitem is to be applied using the rules in subsections 135K(3) to (6) of that Act.