As the BAS lodgement deadline for the June 2019 quarter is now behind us, many businesses are starting to hand over their data files to accountants to commence the preparation of the statutory financial statements and income tax returns. When it comes to Fringe Benefits Tax (FBT), many accountants don’t lodge an actual Fringe Benefits Tax Return, but rather undergo their FBT calculations when preparing the statutory accounts and provide for an FBT reimbursement as income and offset to the shareholder loan account.
A fringe benefit reimbursement in relation to a motor vehicle is probably the most common FBT reimbursements an accountant would cater for and there is an often-overlooked issue that could save you hundreds of dollars in tax. The saving arises when a motor vehicle reaches its fourth year anniversary of the date on which you first owned or leased the vehicle. The reduction applies from the 1st April after the anniversary date which means that rather than calculating the FBT reimbursement on the full value of the vehicle, the base value can be reduced by one third and the FBT calculation applied to the reduced value.
By way of example….
John purchases a car for $39,000 (including GST) on 1 July 2013. The employer can reduce the base value of the car by one third ($13,000) in the FBT year commencing 1 April 2018 (so the 2019 FBT year) and calculate any FBT reimbursement on a significantly reduced amount, potentially saving many hundreds of dollars of tax.
Many accountants may not remember to apply this reduction, so it is a handy note to make to your accountant when handing over your information if this scenario applies to you.