It is that time of year again; the Fringe Benefits Tax (FBT) season is soon to be upon us. And with the ATO announcing their increased focus on FBT in recent years, including audit activity, it pays to get this right.
To assist with making sure you are compliant, please take note of the information below. Further to this, we will be in contact with those who we are aware have FBT obligations. However, in the interim, if you believe you may now have FBT obligations (but not previously), or you have any questions about FBT, or please contact Nick Hill on (07) 3367 3155.
What to do?
In preparation for FBT return for the year ended 31 March 2017, be sure to:
- Have logbooks up to date;
- Take note of closing odometer readings as at 31 March 2017.
How do I know if I need to pay or consider FBT?
If you are not sure whether you are providing fringe benefits to your employees, here are some key questions you should ask yourself:
- Do you make vehicles either owned or leased by a business, that is available to employees for private use?
- Has your business forgiven any debts owed by employees?
- Does your business provide loans at reduced interest rates to employees?
- Has your business paid for, or reimbursed, any private expenses incurred by employees?
- Does your business provide a house or unit of accommodation to employees?
- Does your business provide employees with living-away-from-home allowances?
- Do any employees have a salary package (salary sacrifice) arrangement in place?
- Does your business provide entertainment by way of food, drink or recreation to employees?
- Has your business provided employees with goods at a lower price than they are normally sold to the public?
A common area of confusion is motor vehicles. Where a motor vehicle is owned or leased by a business but is used by an employee for private purposes (including traveling between home and the workplace), then FBT is an issue that needs to be managed. The Tax Office will once again be specifically targeting motor vehicles that are owned by businesses, so it’s important to identify any potential FBT issues before the Tax Office does.
Another common area of confusion is entertainment. Entertainment can be almost anything from food, drink, recreation – such as movie tickets, to non-work based travel. If you provided any entertainment benefit to employees, such as an employee attending a business lunch, then FBT potentially applies. Entertainment is an area of continued focus for the Tax Office, as the FBT treatment also interacts with the treatment of expenses for income tax and GST purposes.
What is exempt from FBT?
Certain benefits are excluded from the scope of the FBT rules. The following work related items are exempt from FBT if they are provided primarily for use in the employee’s employment:
- Portable electronic devices (e.g. laptop, tablet, mobile, PDA, electronic diary, notebook computer, GPS navigation device) that are provided primarily for use in the employee’s employment (limited to the purchase or reimbursement of one portable electronic device for each employee per FBT year);
- An item of computer software;
- Protective clothing required for the employee’s job;
- A briefcase;
- A calculator;
- A tool of the trade.
