The 31st of March is fast approaching, which means the end of another Fringe Benefits Tax (FBT) year. FBT can quite often be ignored by many business owners, as they are unaware that some benefits they are providing to their employees may actually result in Taxable Fringe Benefits.
Business owners should be aware of what constitutes a fringe benefit in the eyes of the ATO, and what their obligations may be.
Ask yourself these questions:
- Are cars or other vehicles owned or leased by the business available to employees for private use, including a car garaged at the employee’s place of residence?
- Have you paid for, or reimbursed, a non-business expense incurred by an employee?
- Do you provide your employees with entertainment by the way of food, drink or recreation?
- Do you provide your employees with loans at reduced interest rates?
- Have you released an employee from a debt?
- Do you provide an employee with a house or other accommodation?
- Do you provide your employees with living-away-from-home allowances?
- Have you provided your employees with property, either free or at a discount, or with goods at a lower price than they are normally sold to the public?
- Do any of your employees have a salary package arrangement in place?
If the answer to any of the above questions is “yes” then you may well have an obligation to lodge a Fringe Benefits Tax Return.
Many small businesses only provide such benefits to owners/shareholders. For these instances, you may simply be required to make an employee contribution to the employing entity for the taxable value of the benefit, removing the requirement to lodge an FBT Return.
All employers should be aware that the ATO’s current focus in relation to Fringe Benefits include:
- Motor Vehicles made available for employee private use,
- Correct reporting (as income) of employee contributions to fringe benefits received,
- Failure by the employer to identify benefits provided,
- Incorrect calculation of value of benefits provided, and
- Non-lodgement of fringe benefits tax returns where benefits with a taxable value have been provided to employees.
In the event of an ATO audit, having the correct paperwork (e.g. Vehicle Logbooks) and signed FBT declarations on file is crucial.