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The FBT year in Australia is from 1 April and ending 31 March the following year, so now is the time to ensure that you are up-to-date with the latest FBT developments in the areas of focus for the ATO.
For the FBT year ended 31 March 2018, the FBT rate has dropped from 49% last year to 47% this year due to the cessation of the temporary budget repair levy from 30 June 2017.
FBT applies to benefits, given to employees in lieu of or in addition to salary or wages, received and this tax is paid directly to the ATO by employers. Benefits received may include such items as vehicles, car parking, housing, private loans and even, these days, Bitcoin.
The ATO has identified two concerns - employers’ failure to identify and report FBT on items and employers incorrectly applying exemption provisions when reporting taxable value on items – in the four areas of concern for the ATO. Let’s delve further…
Where an employer is required to lodge a FBT return, what do you need to know about:
It is necessary for an employer to verify that a FBT exemption applies to the provision of a motor vehicle to an employee for private use. In addition to supplying this verification to the ATO, the ATO is looking for an employer to keep sufficient records to support an exemption.
To ensure that an employer reports employee contributions as income on their income tax return and does not overstate the employee contribution amount in order to reduce an FBT liability, the ATO is focussing on finding accurate declarations on both the FBT return and the employer’s income tax return.
Some employers claim a FBT rebate despite being ineligible to do so. You need to check that you are a rebatable employer and if you are not, then you should ensure you are eligible to receive a FBT rebate before making a claim.
Living Away From Home Allowance (LAFHA)?
An employer pays a LAFHA to an employee to compensate an employee for additional expenses incurred and for the fact of being away from home whilst employment duties require an employee to live away from their usual residence.
It is important to only claim FBT for eligible employees and to obtain declarations from those eligible employees. Claiming for invalid circumstances or keeping insufficient records of the accommodation and meal components will also be closely looked at by the ATO.
It pays to understand how FBT applies in these areas. To minimise your FBT liability, at YML Group we can prepare and lodge your FBT return and/or calculate any employee contribution.
Our fee for the preparation and lodgement of an FBT return is from $500+ GST and for the calculation of an employee contribution is $250+ GST per item.
How can YML help?
Talk to our Accountants today to see how YML Chartered Accountants can assist you with FBT. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.