Fringe benefits tax (FBT): Is your business compliant?
A fringe benefit is a benefit provided to an employee (or their associate) generally by an employer in connection with their employment arrangements. Fringe benefits tax (FBT) is the tax payable by an employer (separate from income tax) as a result of taxable fringe benefits being provided to their employees and is based on the taxable value of fringe benefits provided.
Are you providing fringe benefits?
If you answer yes to any of the following questions you may be providing a fringe benefit, and may be liable for Fringe Benefits Tax:
- Do you make 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 board (meals and accommodation)?
- Do you, as an airline or travel agent employer, provide your employees with free or discounted air travel on a standby basis?
- Do you provide your employees with living-away-from-home allowances?
- Have you, as a tax-exempt organisation, provided your employees with food, drink or accommodation?
- Do you provide car parking for your employees within one kilometre of a commercial car parking station?
- 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?
- Do you provide your employees with other fringe benefits not covered above?
A fringe benefits tax liability can also arise if benefits are provided to your employees by an associate or a third party under an arrangement with you.
For FBT purposes, employees include current, former or future employees, and also directors that conduct their business through a company or a trust.
What action is required?
The FBT reporting period (FBT year) runs from the 1st April to 31st March each year. If you have provided a fringe benefit during the FBT year, before the 21st May you must:
- Register your business for FBT
- Calculate how much FBT is payable
- Maintain the necessary FBT records
- Lodge a FBT return with the ATO
- Report fringe benefits on your Employee’s PAYG Payment Summaries
Here to help
Need more? We provide a full range of Fringe Benefits Tax advice and employer services and can configure a custom package to suit the specific needs of your business – contact us to see how we can help you.