What is Fringe Benefits Tax (FBT?)
Put simply, Fring Benefits Tax (or FBT) is a payment made by an employer to their employees (including their family) for particular benefits. The FBT year ends on the 31st March every year.
Examples of these benefits can include:
- Personal car use (such as driving to and from work)
- School fees
- Discounted loans
- Gym memberships
- Benefits given under a salary sacrifice arrangement
- Christmas celebrations or gifts to staff and clients
Examples that generally are not covered under FBT are items under $300 in value including:
- Mobile phones
- Laptops
- Tablets
- Portable printers
- Protective clothing
- Tools of trade
How does FBT affect me as an employer?
FBT is different from income tax as it is calculated on the taxable value of the benefit. Therefore, if you are paying your employees FBT, you must assess your FBT liability every year and lodge an FBT return. As an employer paying FBT, you can claim an income tax deduction for the amount of FBT you pay.
For those with a trading company or trust without employees, if your entity owns a vehicle, then the entity is required to submit an FBT return. This is because the Director or Trustee is an employee receiving a benefit in the ATOs eyes.
When should you lodge your FBT?
Just like your income tax return, your FBT should be lodged every year. Note the FBT year ends on 31st March, 2021 and the due date for lodgement is the 25th June.
It’s important to note, the ATO is starting to focus more heavily now on FBT. With this, we expect to see them pour more resources into audits and compliance checks. Lodging an FBT return limits the ATO’s audit ability to no more than 3 years. Failure to lodge allows the ATO to go back as far as they desire. Lodging on time every year also helps to avoid an FBT audit.
How can we help with your FBT?
There are ways in which you can work to limit your FBT liability. Our team can help you to assess your current FBT set-up and whether your FBT set-up is right for your business.
If you are unsure whether you should be paying FBT to your employees, get in touch with our friendly team to discuss your FBT obligations. Our simple checklist can help determine whether you should be paying FBT to your employees and therefore lodging a yearly FBT return.
