As a business owner, you must assess whether you are obligated to report FBT for your employees.
FBT, or Fringe Benefits Tax, is a tax that is levied on non-cash benefits that employers provide to their employees in addition to their salary or wages. We have received notice from the ATO they are beginning to target businesses that are not registered for FBT and should be.
In this article we provide information on important information about FBT so you can determine if you provide fringe benefits to your employees and should be registered.
What counts as a fringe benefit?
Fringe benefits can include things like:
- Company cars
- Health insurance
- Gym memberships
- Meals and entertainment expenses
Essentially, any non-cash benefit that an employer provides to an employee can be considered a fringe benefit and may be subject to FBT.
How FBT is calculated?
FBT is calculated based on the taxable value of the fringe benefit. This is the amount that the benefit would have cost the employee if they had paid for it themselves. The FBT rate is currently 47%, but there are some exemptions and concessions that may apply.
When is FBT due?
FBT calculation is completed annually with the end of the FBT period being 31 March. Employers are required to lodge an FBT return with the Australian Taxation Office (ATO) and pay any tax owed by this date however, if you’re lodging through a tax agent (e.g., Walsh Accountants) the due date for lodging is 25 June.
What are the record-keeping requirements for FBT?
Business owners / employers are required to keep detailed records of all fringe benefits provided to employees. This includes information on the type of benefit, the value of the benefit, and the employee who received it. Accurate record-keeping is essential to ensure compliance with FBT laws and to minimise the risk of penalties or fines.
Are there any concessions and exemptions for FBT?
There are several concessions and exemptions available that may reduce FBT liability. For example, small businesses with an annual turnover of less than $10 million may be eligible for certain FBT concessions, and some types of fringe benefits such as work-related devices and tools, may be exempt from FBT.
How can Walsh Accountants help?
It’s important for business owners to be aware of their FBT obligations and should they be required to register, to do so as soon as possible. Failure to do so could lead to ATO audit and penalties.
We have been made aware this is a new target area for the ATO so if you’re concerned about your FBT obligations, we encourage you to contact our office as soon as possible to speak with one of our accounting team members.