The Herald Sun is reporting a “pollies are tax-cheats” story.
Under the alleged scam some MPs who travel interstate are charging Parliament for expensive fully flexible airfares with a return date less than five days later.
It is alleged the MPs are then extending their stay without telling Parliament, to avoid FBT reporting rules.
Under federal tax law, anyone who stays away more than five nights on business is obliged to keep a travel diary and submit it to their employer if their employer paid for their airfare.
My first question would have been:
Why are state MPs travelling interstate at all?
I can think of no reason why state MPs should be travelling interstate on (government/parliamentary) business. But, okay. Moving along.
What I can’t work out is whether this “rort” has any actual taxation consequences. In Australia FBT is paid by employers and not employees – so the Victorian Parliament would be up for any FBT. But different levels of government don’t tax each other (one of the reasons the ACT is broke – they can’t charge the federal government a payroll tax). So the question is whether the Victorian Parliament has to actually pay the FBT or just keeps track of the notional liability. Conversely I suppose given the fiction that MPs are self-employed, they may have to pay the FBT. I’m sure our resident tax law experts might be able to clear that up in the thread.