Using company points for personal travel

[k4kazza]

In the past we have been using our company AMEX card to pay BAS, tax etc to the ATO and now have heaps of points. Just wondering about the legitimacy of using those points for personal travel? PS. We own the business so we are Directors and employees.

 

[fvalemus]

I'm pretty sure you can do that, BUT, you might be liable for Fringe Benefit Tax.

'“Where expenses are incurred on behalf of the employer for legitimate business reasons, FBT would not apply (eg. business expenses purchased on corporate credit card).

“Where an employee enters into an arrangement which allows the employee to use a credit card to pay the employer’s costs, FBT may apply. Where such points exceed 250,000 per annum these may be subject to FBT.

“Similarly, where an employee enters into an arrangement with an employer to receive a reward under a loyalty program as a substitution for income, the employee may incur an income tax liability in respect of that reward.”

Please check with your tax accountant.

 

[straitman]

In the past we have been using our company AMEX card to pay BAS, tax etc to the ATO and now have heaps of points. Just wondering about the legitimacy of using those points for personal travel? PS. We own the business so we are Directors and employees.

The company policy for the rather large (ExxonMobil) company I previously worked for was that the points belonged to the individual.

That being the case it was then up to the individual to use their points as required. (I can't recall the FBT implications)

 

[fvalemus]

The company policy for the rather large (ExxonMobil) company I previously worked for was that the points belonged to the individual.

That being the case it was then up to the individual to use their points as required. (I can't recall the FBT implications)

I think now ATO is trying to focus on this matter. As OP is the director and employee at the same time, it's better to check with Tax Accountant to know what are the regulations surrounding this. As per latest development in taxation, pretty sure that FBT is liable up to certain FF points accrued.

 

[Daggs01]

How could the ATO prove that you used over 250k points that were earnt from the business for personal travel

 

[fvalemus]

How could the ATO prove that you used over 250k points that were earnt from the business for personal travel

I'm not sure about this, but if ATO requests FF providers to disclose their corporate memberships, they can start to work from that point by requesting an audit. From there they should be able to work out:

opening balance
points accrued
points redeemed ---> for who/what, by getting what etc.
closing balance

 

[SeatBackForward]

Surely it would be easier to use said points to attend, you know, a "conference" pertaining to the line of business you're in, just conveniently located at a pleasant destination,at a completely inappropriate time of year, but that you really really shouldn't miss out on.

 

[Daggs01]

Even if they were to disclose their corporate memberships the ultimate goal in the mind of the ATO is to find out $ value of points used.

We all know that each programs points have a different $ value, if points are used for an award redemption there is even more of an issue, then add in that cost varies depending on airline and finally time of year at redemption.

This is variable at the time of use. Plus points can be earnt over many years and then redeemed.

There is too much subjectivity on the matter for the ATO to regulate it and enforce the regulations.

 

[Simo]

Points have no value.

Talk to your accountant and he will advise you.