Fringe benefits tax (FBT) is a tax employers pay on certain benefits (eg. non-cash benefits) they provide to their employees – including their employees’ family or other associates.
The general concept of FBT is to ensure that any benefits over and above wages paid to employees are taxed to capture the PAYG withholding that would be paid if the benefit had been paid as a wage.
FBT is paid by the employer to the Australian Taxation Office (ATO) and therefore it is the employers’ responsibility to comply with the relevant requirements.
FBT is often overlooked by small businesses thinking that it doesn’t apply to them but this is not always the case.
Following improvements in the ATO’s IT capabilities and further access to financial and non-financial data from various external departments, they are now positioned with the tools to target employers for review.
The list of benefits that fall within the FBT regime are listed below:
- Car fringe benefits
- Car parking fringe benefits
- Meal and Entertainment fringe benefits
- Expense payment fringe benefits
- Loan fringe benefits
- Debt waiver fringe benefits
- Housing fringe benefits
- Board fringe benefits
- Living away from home allowance fringe benefits
Whilst this list may seem quite black and white and leads to businesses assuming they do not have any benefits to worry about, there is complexity behind most of these items with the devil being in the detail.
Given the complexity surrounding this regime and the ATO’s continual improvement in being able to monitor and target employers for review, it is essential that businesses rely on their accountant or financial advisor to assess their FBT status.
The FBT year differs from the traditional financial year ended 30 June. The FBT year commences on 1 April and ceases on 31 March of each year.
For the 2021 FBT year, finishing up on 31 March 2021, the due date for lodgement and payment of any FBT tax will be 21 May 2021.
There have also been several significant developments for employers when determining their FBT liability for the 2021 and beyond.
What are some of the notable changes coming into effect?
- Portable electronic devices
An extension has been provided from 1 April 2021 for the FBT exemption for the provision of multiple work-related portable electronic devices where the eligible employer has an aggregated turnover of less than $50 million.
- Small business car parking
An extension has been provided from 1 April 2021 for the FBT exemption for small business car parking where the eligible employer has an aggregated turnover of less than $50 million.
- Car Fringe Benefits
The ATO has provided guidance on how COVID-19 will impact an employer’s obligation in calculating FTB liability in relation to work cars.
At Davidsons, as part of our FBT assistance we provide our business clients with a digital FBT questionnaire that includes easy to answer questions on various benefits to help assess their FBT obligations.
If you are an employer and would like to find out more about FBT or receive our questionnaire to help assess your obligation, please contact your Davidsons team member or email us at firstname.lastname@example.org for more information.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article