FRINGE BENEFITS TAX

As a business owner, you may have heard of FBT (Fringe Benefits Tax) or discussed this with your accountant. Are you still wondering just what this is, and if you need to pay?

Fringe Benefits Tax is a specific type of tax that employers must pay if they provide benefits to their employees, employee’s families, or other associates.

Two key things to remember are:

1. FBT is separate from income tax, and is calculated on the value of the benefits that have been provided.
2. Benefits that incur FBT can be in addition, or part of, a salary package or agreed wages. Benefits provided to a director of a trust or a company can also be subject to FBT.

As an employer, you will probably be able to claim tax deductions for both the costs of the benefits you provide, and the FBT you pay each year.

What are fringe benefits?

This is a benefit received by an employee, and can be provided by an employer or a third party through an arrangement with an employer (think something like a discount at Gym X because you work for Store A).

According to the ATO, ‘examples of fringe benefits include:

• allowing your employee to use a work car for private purposes
• giving your employee a discounted loan
• paying an employee's gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by your employee, such as school fees
• giving benefits under a salary sacrifice arrangement with an employee.’

Do I need to pay?

It’s important to properly assess the status of any FBT that you may need to pay. Often, benefits provided to volunteers or contractors will not attract any FBT, but employee benefits will. Make sure you have discussed this with your accountant, as the FBT year runs from 1 April to 31 March, which will be here before you know it.

Where can I find more information?

The best thing to do is speak with your accountant or financial planner to ensure you fully understand any obligations you may have under this tax type. Because FBT includes a number of categories, and each category holds its own specific valuation rules, FBT can get confusing.

The following links from the ATO may assist you in formulating all your questions before you speak with your accountant, and ensure that you are fully aware of all the potential categories that fringe benefits can fall into.

Follow the links below for more information on:

• Car fringe benefits
• Car parking fringe benefits
• Entertainment and fringe

• Expense payment fringe benefits
• Loan fringe benefits
• Debt waiver fringe benefits
• Housing fringe benefits
• Board fringe benefits
• Living away from home allowance fringe benefits

Other

• Property fringe benefits (including property, goods or shares)
• Residual fringe benefits (benefits not covered by the above categories)

How can YML help?

Talk to our Tax department today to see how YML Group can assist you with your tax needs. Contact us on (02) 8383 4400 or by visiting the Contact Us Page