If your business has provided any benefits to yourself or your employees, you need to be aware of your reporting obligations.
Fringe Benefits Tax (FBT) has a broad application and looks to capture many arrangements between employers and employees that are not taxed as salaries or wages.
The ATO has announced a crackdown on FBT obligations and will be looking closely at income tax returns and business activity statements to ensure all fringe benefits are being reported.
It is important to understand when FBT may apply so that benefits are recorded correctly, and any resulting tax can be managed.
What is FBT?
The FBT year runs from 1 April to 31 March and is a tax payable by employers on certain benefits provided to employees or their associates. It may be in addition to, or form part of, their ordinary wages. Fringe benefits tax is separate from income tax and is calculated on the taxable value of the fringe benefits provided.
Examples of fringe benefits include:
- Allowing your employee to use a work car for private purposes
- Paying for an employee’s flights to a conference where they later holiday for an extended period of time following the conference
- Providing your employee with a discounted loan
- Paying an employee’s gym membership or other personal costs
- Providing entertainment, such as free concert tickets
- Providing employees with free car parking
- Reimbursing an expense incurred by your employee, such as school fees or medical insurance
- Providing benefits under a salary sacrifice arrangement
Compliance Requirements
If your business is providing fringe benefits, and if the employee does not reimburse the business for the taxable value of the fringe benefits provided, the business is required to register for fringe benefits tax, lodge an FBT return, and pay any tax due.
The lodgement and payment due date is 21 May. However, if the return is lodged by a registered tax agent, the payment due date is extended to 28 May and the lodgement due date is extended to 25 June.
You are also required to record fringe benefits provided to employees in the employee’s payment summary where the individual’s fringe benefits amount exceeds $2,000.
What you need to do now:
If your business is providing fringe benefits to employees, the following will assist you in getting ready for the end of the fringe benefits tax year:
- Record odometer readings of all motor vehicles provided to employees and subject to FBT as at 31 March 2019;
- Obtain copies of employee motor vehicle log books to ascertain private use;
- Request details from employees of when these vehicles were not available for private use;
- Review your files to identify any possible benefits provided to employees and their associates;
- Review salary packages in place for any unspent amounts; and
- Request receipts for any unreimbursed expenditure from employees.
Remember – Directors of a company or trust may also be subject to FBT if they are receiving certain benefits. Sole traders and partners in a partnership however are not employees, and are therefore not obligated to report fringe benefits.
We can help:
It is important that employers understand their obligations. If you would like more information about fringe benefits tax, or assistance with preparation of your FBT return, please contact our team on 07 3821 4401.
