By Andrew Law
Can you believe we’ve made it to the last quarter of the financial year? This is such a busy time, with year-end planning, new-year budgeting, and – for some poor souls – the dreaded inventory stocktake.
As if all of this wasn’t hectic enough, it also coincides with Fringe Benefits Tax season.
Here’s how to get your business ready for lodging in time for EOFY.
In this article:
Do I need to pay Fringe Benefits Tax?
Fringe Benefits Tax (or FBT for those who enjoy acronyms) is a tax paid by employers on the taxable value of certain benefits paid to employees. If you are going to provide your staff with benefits, it’s important to make sure you understand your tax obligations (because if you don’t pay, Canberra will be very unhappy).
Here are a few examples of FBT:
- If SBO Tax provides Jason with a new gaming computer, which he occasionally does some work on, we may be up for FBT.
- If you provide your staff with too much fun – i.e. meals, drinks or even work conferences (which are finally a thing again!) – these may be subject to FBT.
- Ridiculously, providing RATs to your employees would’ve been subject to FBT until recently – thankfully, common sense eventually prevailed.
Some of the more common instances for businesses in the FBT space include:
- Motor vehicles, in particular, personal use of motor vehicles
- Entertainment (in all different sorts of forms!)
- Car parking
- In-house provision of goods and services generally provided by the company.
Essentially, the taxable value of the benefits you provide to your employees should reflect the gross salary employees would have to earn at the highest marginal tax rate to buy the benefits themselves after paying tax.
Fringe Benefits tax returns are not always straightforward. There are a lot of exemptions, concessions and reductions to note because, well, you know, this is tax and it’s never simple.
A full guide to fringe benefits tax can be found on the ATO’s website.
If you’re unsure about whether FBT affects you, just ask yourself this question:
Did your business give or provide stuff to your employees (tangible or otherwise), instead of paying them a salary?*
*Of course, it’s much more complex than this – but this is a good place to start.
When do I need to lodge a Fringe Benefits Tax Return?
In a weird quirk of the tax legislation, this year the FBT year-end is 31 March 2022 – with payments and lodgements usually due a month or two following, depending on your particular circumstances.
SBO Tax (yes, we now do taxes) are currently in the process of preparing a questionnaire to go to our clients, to help assess their exposure to FBT. Look out for this in your inboxes.
That said, if you know you’re already in that space, or are unsure about whether it affects you – or just have any questions as to how FBT operates generally – please get in touch with us.