Fringe Benefits Tax & Compliance

Posted 28 Mar '19

Fringe Benefits Tax & Compliance

By D'Lene Browning

What is Fringe Benefits Tax and how do I stay compliant?

Fringe Benefits tax (FBT) is a tax imposed on employers for non-cash benefits provided to employees (or an associate of an employee) in respect of employment.

The tax is imposed on the grossed-up taxable value of the benefit provided to employees during the FBT year (1 April to 31 March) at a rate of 47%. Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the FBT they pay.

ATO audit activity in the FBT area has significantly increased in the past year or so. For example, by using information obtained via State (Motor Vehicle) registration records the ATO can see the number and type of vehicles owned by your business.

Fringe Benefits Tax is often overlooked by business owners as they are unaware what employee benefits may result in FBT liability. For your business consider:

• Is an employee permitted to use a business car for private purposes or is the car garaged at your employee’s place of residence?

• Do you pay expenses on behalf of your employee?

• Have you loaned your employee money?

• Have you forgiven a loan made to your employee?

• Do you provide your employee with accommodation?

• Do you provide your employee with a living away from home allowance?

• Do you provide your employee with goods or services free of charge or heavily discounted?

• Do you provide your employee with entertainment?

Please refer to our website for further explanation on the types of Fringe benefits. There are many inclusions, exclusions and exemptions for each of the benefits that can’t be explained in detail here, however, please feel free to contact our office to discuss these in further detail specific to your business and circumstances.