Introduction
1. On 11 December 2014, among other Bills, the following Acts were enacted to amend employment related legislation:
(a)Fringe Benefit Tax (Budget Amendment) Act No. 6 of 2014.
(b)Stamp Duties (Budget Amendment) Act No. 12 of 2014.
(c)Fiji National Provident Fund (Amendment Act) Act No. 13 of 2014.
Copies of the Acts which commence on 1 January 2015 are attached.
What the amendments do
Fringe benefit tax
General exemption
2. A fringe benefit provided to employees of a religious body registered under the Religious Bodies Registration Act (Cap. 68) is now exempt from the Fringe Benefit Tax (FBT) Decree 2012.
Housing Fringe Benefit
3. The housing fringe benefit exemption for hotel employees in remote locations has been changed to require FBT to paid on the housing benefit provided to hotel employees holding executive positions. It is unclear why hotels have been singled out but the impact is that hotels will now need to account for FBT on housing and accommodation of its executive employees regardless of their location.
Motor vehicle fringe benefit
4. Where employees are provided with the use of a motor vehicle for work and private use, the amendment to the Decree now sets the value of the benefit used in employment at 50%. This means that employees no longer need to keep log books with the uncertainty of the proportion of personal usage eliminated. This change could possibly reduce the impact of FBT for some employers.
5. Finally, FBT is no longer an allowable deduction in the calculation of chargeable income for the employer.
Stamp duty
6. Employment contracts are now listed as exempt from stamp duty. Employment contracts were previously exempt from stamp duty by virtue of section 13(2) of the Employment Act (Cap.92). When the Employment Relations Promulgation 2007 (ERP) came into force, an equivalent provision was not provided for. This amendment now reinstates the position pre-ERP.
FNPF
7. The amendment to the Fiji National Provident Fund (FNPF) Decree 2011 now requires an 18% contribution to FNPF from total wages payable to an employee (from the previous 16%). Oddly the amount an employer may deduct and recover from an employee for the employee’s contribution is 8/18 or 44.4% (whichever is higher) of the total contribution. While the difference may be miniscule, the formula is likely to cause anomalies in the employer/employee contributions. It would have been clearer to have stated the employee deduction at 8% of the total wages rather than a percentage of the total contribution.
Watch this space…
Workers compensation
8. In the first parliamentary session following the 2014 General Elections, the Minister for Employment announced that the workers compensation regime will be overhauled. Apart from other changes announced it is expected that the maximum compensation payable for death will double to $48,000.
Contact
19. Contact any Munro Leys partner Jon Apted or Glenis Yee to discuss further.