Fringe benefits tax (FBT) is a tax payable by employers on benefits that are provided to their employees and their associates. The FBT rate for 2016 and 2017 is 49%.
The most common types of FBT are:
- Car fringe benefits;
- Car parking fringe benefits;
- Entertainment fringe benefits;
- Expense payment fringe benefits;
- Housing fringe benefits; and
- Living away from home allowance fringe benefits.
Whilst the above list does catch a large array of benefits provided to employees, the good news, is not all employee benefits are taxed under FBT. These excluded benefits include the following work-related items as long as they are used primarily for work purposes and there is only one item per year (unless it is a replacement item):
- Portable electronic devices such as mobile phones, laptops, tablets, portable printers and GPS navigation receivers;
- Computer software;
- Protective clothing;
- Briefcases; and
If you are providing the above benefits to your employees, please contact our office and we can discuss this with you further.
For those who are getting everything ready for us to prepare the FBT returns, please ensure that the following have been completed by 31 March:
- For any vehicles that are provided to your employees:
- Please ensure you obtain an odometer reading at COB on 31 March 2017; and
- If it has been longer than 5 years since a log book was completed, a new vehicle has been acquired or there has been a change in the percentage of private or business use for the vehicle, then a new log book should be prepared. The log book should track all kilometres travelled over a continual 12 week period. There are different methods of calculating vehicle expenses, the operating cost method by having a 12 week log book is ideal if the cost of the vehicle is high and the operating costs are lower than average.
- Review any Entertainment expense invoices and ensure that you have the invoices easily accessible (including those for the Christmas party or staff Christmas gifts) so we can get in touch with you in April to discuss in detail.
Note that even if you have a NIL liability for FBT (often in cases where employees made contributions to reduce the FBT amount payable to Nil), it is still recommended that you lodge a return. Lodging a return reduces the ATO’s period of review to 3 years and reduces the likelihood of an FBT audit.
If you have any questions regarding your FBT obligations, please give your trusted PJT accountant or advisor a call on 07 54139300.