If you are a business that employs staff you are required to consider what fringe benefits you have provided to employees during the year ended 31 March 2021.
what is a fringe benefit?
A fringe benefit is essentially any benefit you provide to your employees that is not part of their wages.
The common types of benefits we see are:
- Provision of cars to employees
- Entertainment such as lunches, after-work drinks, Christmas parties or corporate boxes
- Payment of private expenses on behalf of employees
- Living away from home allowances
- Provision of car parking to employees
If you provide any of these benefits to employees you will need to consider whether that benefit results in an FBT liability. In some cases, you can use employee contributions to eliminate the FBT liability. We can assist you in making that determination.
do you need to lodge an FBT return?
You are required to lodge an FBT return if the benefits you provide to employees result in an FBT liability. For the 2021 FBT year, this return must be lodged on or before 25 June 2021 if lodged electronically via a tax agent or 21 May 2020 if your agent lodges by paper [or you do it yourself].
The ATO uses data from a variety of sources to identify businesses that may not be meeting their FBT obligations. Penalties and interest may apply where you fail to report fringe benefits provided to employees.
If in doubt you should consider lodging a nil FBT return to reduce this risk.
what are the key exceptions?
There are a few common exemptions which might apply to you. These are:
- Minor benefits – costing less than $300 per person and provided on an infrequent and irregular basis. For example, Christmas parties which generally cost less than $300 per person and only occur once a year.
- Otherwise deductible costs – expenses that would be tax-deductible to the employee if they incurred it directly.
- Portable electronic devices – devices [such as iPads, laptops, mobile phones, etc] provided primarily [over 50%] for the purpose of enabling the employee to do their job.
- Exempt vehicles – vehicles which are not principally designed for the purpose of carrying passengers [such as vans, utes, trucks, etc] and the private use is minor, infrequent and irregular.
what you need to do
If you are a businessDEPOT client that employs staff you will shortly receive an information pack which outlines what you need to consider for the 2021 FBT year.
In the meantime please ensure that you record your car odometer readings [on all of your cars] by the end of today 31 March 2021.
If you have any questions or need any assistance with meeting your FBT obligations please contact a business tax consultant at 1300BDEPOT.