Tax & Business & FBT

What is FBT – Fringe benefits tax (FBT) is a tax paid by an employer on certain benefits provided by an employer to employees or employees’ associates (usually family members). FBT is another tax on top of Income Tax or PAYG and is based on the taxable value of the benefit(s) provided.

FBT Examples – Fringe benefit exampleas are providing a car or use of a car (note the exemption below), interest free or discounted loans, paying employee’s personal expenses (health  insurance and personal mobile phone use) known as expense payment benefits, mobile for personal use, entertainment including restaurant meals, but not <refreshments>. As the car is often the largest expense that often has a private use portion we have provide the FBT rules relating to a car, and the logbook method (and documentary info you need) and statutory method links for your assistance.

Salary Sacrifice – means when an employee reduces their wage in exchange for the employer providing benefits to the employee or paying for items on behalf of the employee suchas an increase in superannuation over the mandatory rate (9% at the time of writing). This salary sacrific is documented in writing between the employee and the employer. More on Salary Sacrifice

Exempt Fringe Benefits: Some benefits are exempt some examples are:

a mobile/car phone (only if mainly used in the employee’s employment) , protective clothing for work,  a briefcase, a calculator, a tool of trade, an item of computer software for use in the employee’s employment, an electronic diary, a personal digital assistant (PDA) or similar item, a notebook computer, a laptop computer or a similar portable computer (limited to one per employee per year), or portable printers; Taxi travel to from work, or arising from sickness, infrequent gifts of $300 or less, employee relocation expenses and the most common largest exempt benefit, the motor vehicle.

You Provide fringe benefits so what’s next: You need to:

  • Keep records, or change your  account descriptions in your accounting software such as MYOB, and keep private use records of employees etc so your accounant can calculate the fringe benefits tax payable.
  • Provide this info to your accountant as soon after 31 March each year (the FBT tax year…yes its different to the income tax year).
  • Lodge an FBT return – The return is due 21 May each year.
  • Report the Fringe benefits that are ‘reportable fringe benefits‘ on the employees payment summaries, this is so the correct child support and other payments, concessions, rebates can be calculated.

For more info click here for the ATO website.