What is FBT?
Fringe Benefits Tax (FBT) is a tax that employers need to pay on any non-cash benefits (additional to their wages or salary) provided to employees, family or other associates. This includes any current, future or past employees.
Example of Fringe Benefits:
- allowing an employee to use a work car for private purposes
- giving an employee a discounted loan
- paying an employee’s gym membership
- providing entertainment by way of free tickets to concerts
- reimbursing an expense incurred by an employee, such as school fees
- providing entertainment by way of food, drink or recreation to employees (including any Christmas party)
- giving benefits under a salary sacrifice arrangement with an employee
Should you be registered for FBT?
Generally, if you have employees, including directors and you provide them with cars, car parking, entertainment (food and drink), employee discounts, reimburse private expenses etc, then you are likely to be providing a fringe benefit and we will need to register your business for FBT.
What items are exempt from FBT?
If you’re providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value, you are unlikely to have to worry about FBT. The exemption only applies if the benefits are both minor and infrequent.
Why is FBT important?
Without an FBT return being lodged, the ATO has the discretion to launch an audit into activities as far back as a business has had employees. Without the evidence (e.g. signed declarations, logbooks, meal entertainment records, etc.) that FBT was NOT payable in each year the ATO is likely to raise FBT liabilities, even where the employee who enjoyed the benefit no longer works for the business. Thereby making it impossible for the business to recoup anything.
What should you do now?
The FBT year runs from 1 April to 31 March. It is important you start gathering all the details of these provided benefits as soon as possible using our annual FBT Checklist, so we can calculate any potential FBT liability and lodge your FBT return on time – due 25 June 2020 with payment to be made by 28 May (if lodged electronically).
If you have questions or would like further information please contact us on 03 8419 9800.