FRINGE BENEFITS TAX 2023/24
Fringe Benefits Tax (FBT) is a tax payable by employers on non-cash benefits provided to employees.
This is essentially any benefit provided to employees beyond their normal salary and superannuation.
Common examples of Fringe Benefits are:
- Private use of vehicles;
- Car parking;
- Provision of entertainment;
- Payment/reimbursement of private expenses;
- Provision of loans;
- Provision of goods/services from the business; and
- Living Away From Home Allowances (LAFHA).
Where an employer provides Fringe Benefits to employees, those benefits must be valued in accordance with the legislation, and the employer (as opposed to the employee) then pays FBT at the rate of 47% on the “grossed-up” amount.
The effect of this methodology can be a FBT liability that is almost as much as the cost of the benefit provided. For example the FBT on a benefit of $1,000 can be as much as $978.
There are a number of exemptions & concessions that can be accessed by employers to reduce or eliminate the FBT liability. For example, low value benefits (< $300) may be eligible for the Minor Benefits Exemption.
There are also specific rules, concessions & exemptions that apply to ‘employers operating in the not-for-profit sector, ‘small business concessions’ and an Electric Cars Exemption that can produce beneficial salary packaging opportunities.
Whilst the Electric Cars Exemption can be very beneficial, there are a number of associated issues to be across. For example the exclusion of plug-in hybrids beyond 31 March 2025 and the ATO’s recent guidance on home charging set-out in PCG 2024/2.
With the FBT year ending on the 31st of March 2024, employers should take steps to ascertain their FBT position and to prepare to lodge a FBT return (if necessary). This includes ensuring that record keeping requirements are met.
For example where the ‘operating cost’ method is used for motor vehicles, it is necessary to ensure that there is an odometer reading taken on the 31st of March and that a valid logbook is in place.
If you need assistance to understand your business’s FBT obligations, or to prepare the FBT return, please get in touch. Likewise, reach out to us if you would like to know how you can maximise salary packaging opportunities and to legally minimise the FBT exposure of your business.
Sky Accountants Ballarat
Phone: 03 5332 8855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Gisborne & Macedon Ranges
Phone: 03 5428 1400
Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437