Fringe Benefits Tax

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Fringe Benefits Tax

On 31 March 2021, the Fringe Benefits Tax (FBT) year ends. With the ever-increasing budget deficits as a result of COVID-19, the ATO will be reviewing whether all employers who should be paying FBT are paying it, and that they are paying the right amount.
Do you require to lodge a FBT Return for the Period ended 31 March 2021 for your business?
Click start here to find out if your business need to lodge FBT return for year 2021 or read below some Frequently Asked Questions ( FAQ).

Frequently Asked Questions ( FAQ)

1. WHAT IS FRINGE BENEFITS TAX ( FBT) AND SHOULD YOU BE REGISTERED FOR FBT?
Generally, if you have employees (including Directors) and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT.

To find out if your business need to registered for FBT, Please “Click Here” .

2. SHOULD YOU LODGE AN FBT RETURN EVEN IF NO FBT IS PAYABLE?

Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway?

Our strong recommendation to you is yes, you should lodge an FBT Return, even if no FBT is payable.

This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you FBT and penalties.

3. How the ATO identifies potential Audits?

It is important to note that when an employee contribution has been declared it does not mean that an employer is required to lodge an FBT return. An FBT return is only required when an FBT liability arises, but it can be lodged as NIL to limit the ATO audit period to 3 years.

For more details about ATO read it here.

4. Why you should lodge a FBT Return?

Even though Fringe Benefits Tax (FBT) is designed to capture benefits enjoyed by an employee, it is levied on the employer. Unless your employment agreement allows for any FBT that becomes payable to be recouped from the employee, the employer will have no recourse for reimbursement.

For more details read it here.

5. WHAT ITEMS ARE EXEMPT FROM FBT?
If you are providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc, or minor and infrequent benefits that are less than $300 in value, you are unlikely to have to worry about FBT.

The exemption only applies if the benefits are both minor and infrequent. For more details read it here.

6. What are exempt minor and infrequent Benefits?

Many employers are unknowingly falling foul of the FBT regime through an incorrect interpretation of the minor and infrequent exemption allowed for benefits that cost less than $300.

The most prevalent area where employers find themselves in trouble when applying the minor and infrequent exemption is in relation to the provision of ‘Meal Entertainment’.

For more details read it here.

7. ARE THERE ANY SPECIAL COVID-19 EXEMPTIONS FOR FBT?
You may provide your employees with benefits you do not usually provide because of COVID-19. This includes paying for items that allow your employees to work from home.

For more details read it here.

8. FOUR WAYS YOU CAN REDUCE YOUR FBT LIABILITY

Here are four 4  ways in which you can reduce your FBT liability:

  1. replace your fringe benefits with cash salary;
  2. provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
  3. look at providing benefits that are exempt from FBT; and
  4. use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don’t reimburse them for. You need to be aware that employee contributions will be deemed assessable income to you and subject to GST.
9. HOW AN ASSOCIATE LEASE CAN IMPROVE YOUR FAMILY’S AFTER-TAX CASH FLOWS?

This is an excellent tax planning strategy that you may want to discuss with us. We have prepared a factsheet that outlines how an “Associate Lease” can be used to help improve your employees after tax cash flows, where one spouse earns considerably more than their partner. Our Using an Associate Lease factsheet outlines the following:

  • How an Associate Lease is structured.
  • The benefits of an Associate Lease versus a straight novated lease.
  • How the FBT liability is removed.
  • The benefits of salary packaging a vehicle versus buying it directly with after tax funds.

If you would like further information on associate leases and whether they would be beneficial to your family to reduce your overall family level of tax, please contact us and we can help you.

For more details read it here.

NEXT STEPS

To find out if your business need to lodge FBT return for year 2021 ,
Please Click here Or Book a Free 15 minutes consultation.

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