As an employer, you might have made the decision to provide your staff with certain benefits in order to reward or retain staff or attract new employees. These fringe benefits will incur tax, known as Fringe Benefits Tax (FBT) and will need to be reported and paid on your quarterly or annual BAS. You will also need to register for FBT.
You should ensure that you’re meeting your tax obligations by keeping accurate records and calculations on the amount that you’ll need to pay and also claim as a tax deduction.
What Is FBT?
FBT or Fringe Benefits Tax is a non-cash payment that you provide to your employees, their families or their associates in addition or a part of their employment package. FBT is taxed at 47% for the 31 March to 1 April FBT year. You’ll need to work out the grossed-up value of the fringe benefits and provide the amount on your employee payment summaries.
What Are Fringe Benefits?
Fringe benefits can be provided to your staff in numerous ways, and include:
- Private use of a business car
- Car parking, petrol or maintenance expenses
- Low interest loans for personal purposes
- Gym or health memberships
- Entertainment or recreations expenses such as meals, accommodation, cinema tickets
- Recreational electronic devices
- Payment of school fees or childcare costs
- Private health insurance
- Shares and bonds
- Residential leases
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What Are Exempt FBT Benefits?
Not all benefits you provide will incur FBT and will also be exempt from income tax if provided to employees. These include:
- Personal use of a company car if used between home and a workplace
- Car expenses based on kilometres travelled
- On premises child care
When Do You Need To Report FBT?
You’ll need to report FBT to the Australian Taxation Office (ATO) and report the amounts through your quarterly or annual Business Activity Statement (BAS) after you register.
The due dates for paying your FBT are:
- 21 May if your return is lodged by paper
- 25 June if the return is lodged electronically
The rates of FBT do change, so it’s a good idea to be on top of the current rules and regulations.
How To Register For FBT
FBT has its own calendar, which runs between 31 March to 1 April. You will need to register with the ATO separately to your BAS and PAYG tax obligations. You will need an Australian Business Number (ABN) before register via phone, email or the easiest option is through a registered tax agent.
You’ll need to assess your FBT amounts by using a type 1 or type 2 calculation for each employee. The FBT amount is then lodged:
- Electronically using STP
- Through a tax agent
- Or by post
Record Keeping
As with all business paperwork, the ATO required you keep all of your records relating to the fringe benefits you pay your employees. This includes how you calculated the taxable value of the benefits you have paid. You must also keep your records to take advantage of claiming tax deductions and the various exemptions or concessions that reduce your FBT liability.
Records should be kept for five years from the date your FBT return was lodged, or from the due date, 12 May, your FBT should be lodged. All records should be in English, and if electronic, should be accessible.
Examples of these records include:
- calculations
- worksheets
- employee declarations
- elections
- invoices
- receipts
- bills of sales
- lease documents
- travel diaries
- logbooks
- odometer records.
You don’t need to submit these records with your FBT return, just have them on file in case you are audited.
ITP Tax Accountants can help advise and calculate your FBT liability, and also help you to claim the costs as a tax deduction. Calculating the correct FBT is complex. ITP Accounting Professionals can calculate and handle this process for you so that no mistakes are made.