Issued by authority of the Minister for Revenue
and Assistant Treasurer

Fringe Benefits Tax Assessment Act 1986

                        Fringe Benefits Tax Amendment Regulations 2006 (No. 2)

Section 135 of the Fringe Benefits Tax Assessment Act 1986 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Certain employers are required to make quarterly instalments of fringe benefits tax (FBT).  Effectively, the employer is required to make quarterly instalments of ¼ of the amount of tax in their most recent year of tax for which the Commissioner has made an assessment.

The purpose of the Regulation is to ensure that employers' quarterly instalments reflect, as closely as possible, their expected tax liability for the first year after the FBT rate is changed.

Since the FBT rate changed from 48.5 per cent to 46.5 per cent from 1 April 2006, an equivalent reduction in the notional tax amount is provided.

To ensure that any future changes in the FBT rate are appropriately reflected in employers' notional tax amounts, the regulation provides for a generic variation of notional tax amount, which applies in any year that the FBT rate is changed.

The Regulations are taken to have commenced on 1 April 2006, and would apply for the FBT year starting 1 April 2006 and later years.  Subsection 12(2) of the Legislative Instruments Act 2003 prohibits the retrospective operation of regulations, or a provision of regulations, which adversely affect the rights of, or impose liabilities on, a person other than the Commonwealth in respect of anything done or omitted to be done before the date of notification.  The retrospective commencement would not contravene subsection 12(2) because the proposed Regulations would not retrospectively disadvantage a person or impose a liability upon a person (see advice from the Office of Legislative Drafting and Publishing in Attachment).