Advivo Accountants and Advisors answers some of the common FAQs to help you prepare for the FBT season…
If you are providing certain benefits to your employees or you are receiving certain benefits as a director of a company (or trustee of a trust), you may be subject to FBT. To help, Advivo has answered some of the common FAQs about Fringe Benefits Tax or FBT.
What is FBT?
A fringe benefit is a benefit provided in respect of employment, essentially a benefit provided to an employee (or their associate) because they are an employee. An example of a fringe benefit being provided to an employee may be one of the following:
- Allowing your employees to use a work car for private purposes
- Giving your employee a cheap loan
- Reimbursing an expense incurred by your employee, such as school fees
- Providing entertainment by way of food, drink or recreation.
What are the lodgement and payment dates?
The FBT lodgement and payment dates are as follows:
- 2020 FBT return is due 21 May if lodged by paper;
- 2020 FBT return is due 25 June if lodged by our office, however, the payment due date is 28 May 2020.
What are the different types of Fringe Benefits?
To clarify there are nine types of fringe benefits listed by the ATO as listed below:
- Car fringe benefits
- Car parking fringe benefits
- Entertainment fringe benefits
- Expense payment fringe benefits
- Loan fringe benefits
- Debt waiver fringe benefits
- Housing fringe benefits
- Board fringe benefits
- Living away from home allowance fringe benefits
What is not considered a Fringe Benefit?
The following are not fringe benefits:
- Salary and wages
- Shares purchased under approved employee share acquisition schemes
- Employer contributions to complying super funds
- Employment termination payments (including for example, the gift or sale at a discount of a company car to an employee on termination)
- Payment of amounts deemed to be dividends under Division 7A
- Benefits provided to volunteers and contractors
- Exempt benefits such as certain benefits provided by religious institutions to their religious practitioners.
How can you reduce your FBT payment?
There are a few strategies to reduce the amount of FBT you (employer) pay. We have listed some below:
- Replacing fringe benefits with cash salary.
- Providing benefits that your employees would be entitled to claim as an income tax deduction if they had paid for the benefits themselves (the ‘otherwise deductible’ rule);
- Providing benefits that are exempt from FBT;
- Using employee contributions. Generally, this payment is a cash payment made to you or the person who provided the benefit. However, an employee can also make an employee contribution towards a car fringe benefit by paying for some of the operating costs (such as fuel) that you do not reimburse.
Should I consult a Specialist Accountant?
You should always consult a specialist accountant when considering your options for reducing liability in your business. The ATO usually do not notify you of how much FBT you (employer) must pay. Rather, you self-assess your FBT payable when you lodge your FBT return.
If you need any tax or accounting advice, we have a talented team of accountants, business advisors, and accounting consultants located in Brisbane who will listen to you and take a hands-on approach to manage your business and individual financial needs. Call our office today on (07) 3226 1800, or use our Contact Form.