Fringe Benefits Tax

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.

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.

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.

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

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.

For more details read it here.

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.

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.