Fringe benefit tax
With the end of the Fringe Benefit Tax year upon us this month, it is critical that as an employer you understand your FBT obligations to avoid significant penalties from the Australian Taxation Office.
FBT is a tax paid by employers, separate from income tax, and based on the taxable value of non-tax benefits provided to your employees or associates. Fringe benefits include car parking, loans, cars, payment of expenses etc. FBT contributes a significant amount of revenue to the Government each year, and with more than 750,000 employee’s receiving fringe benefits in the last FBT year, the ATO does not treat those that evade paying it lightly.
The average liability per case for businesses reviewed with respect to FBT was about $77,000, with interest topping almost $20,000. This FBT year the ATO will be targeting specific areas:
- Not-for-profit concessions for benefits provided to employees of public/nonprofitmedical institutions.
- Employee contributions through tax agents and self preparers – employee’s contributions can reduce the taxable value of a fringe benefit.
- Exempt vehicles.
- Late or absent lodgment of FBT returns – penalties apply
- If your employees use business owned cars or vehicles for private use and these are taken home by your employees overnight (even if just for security reasons).
- If you have provided staff with living away from home allowances.
- Where you have taken on any debt owed to the company by an employee.
- If have paid or reimbursed any employee expenses, including food, petrol, entertainment etc.
- If you have provided staff with property such as computer goods, free or discounted.
- If you have provided employees with free or discounted accommodation, or reduced or free-of-interest loans.
- Where you have arrangements in place with employees regarding salary sacrifice.