The Fringe Benefits Tax [FBT] year-end is quickly approaching. FBT continues to remain an area of focus for the Australian Taxation Office [ATO] in ensuring businesses are meeting their tax obligations.
As such, it is important for businesses with employees to consider what fringe benefits you may have provided to your staff during the FBT year [1 April 2022 – 31 March 2023].
what is a fringe benefit?
A fringe benefit is any non-cash benefit you have provided to your employees, that is deemed to be of a private nature and is not part of their wages.
The most common types of benefits we see are:
- Motor Vehicles – Owned by the business and made available to employees for private use [this includes Utes!].
- Meal & Recreational Entertainment – Christmas parties, Melbourne Cup, EOFY parties, offsite lunches, after-work drinks, tickets to events or corporate boxes and work retreats.
- Payment of private expenses on behalf of employees – Insurances, costs associated with their privately owned vehicles, gifts that are $300 or over, phone or internet expenses, gym memberships, school fees and childcare expenses.
- Loans – Provided to employees without repayment and interest terms.
- Living away from home allowances
- Car parking provided to employees
If you believe any of the above benefits [or similar] have been provided to your employees [by you or a third party], then you should consider whether that benefit results in an FBT liability.
In some cases, an employee contribution may reduce or eliminate the FBT liability. We are happy to help you determine this.
do you need to lodge an FBT return?
If the benefits that you provide to employees do result in an FBT liability, lodging an FBT return is considered a requirement. For the 2023 FBT year, your return must be lodged on or before 25 June 2023 if lodged electronically via a tax agent or 21 May 2023 if your agent lodges by paper [or you do it yourself].
We still recommend lodging an FBT return if the liability is reduced to nil either by employee contributions or the application of relevant exceptions and exemptions.
This is because the ATO can obtain data from a variety of sources to identify businesses that may not be meeting their FBT obligations, and penalties and interest may apply if you fail to report fringe benefits provided to employees.
Without lodgement of an FBT return, there is no time limit for the ATO to review prior year returns, whereas lodging the return generally restricts the review period to 3-6 years.
what are the key exceptions?
There are a few common exemptions that might apply to you. These are:
- Minor benefits – Costing less than $300 including GST per person and provided on an infrequent and irregular basis [E.g. 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 [E.g. Income Protection Insurance or training courses related to their employment].
- Portable electronic devices – Devices provided primarily [E.g. over 50%] for the purpose of enabling the employee to do their job [E.g. iPads, laptops + mobile phones].
- Exempt vehicles – Vehicles that are not principally designed for the purpose of carrying passengers provided the private use is minor, infrequent, and irregular [E.g. vans, Utes, trucks, etc].
what’s new to FBT in 2023
The 2023 FBT year has seen a number of developments that will have an impact large number of employers. While not exhaustive, some of these key changes include:
- FBT exemption for electric cars – Subject to meeting certain criteria, the provision of electric cars to employees may be exempt from FBT.
- High Court ruling on independent contractors – If you utilise ‘independent contractors’ it is important to note that they may be an ‘employee’ in the eyes of the ATO, leaving you potentially open to FBT liability.
- Car parking – There have been developments as to what the ATO views as a commercial car parking station when considering parking facilities within a one-kilometre radius [now includes airports, hospitals, and shopping centres].
- Motor Vehicle Logbooks – the ATO now expects to see detailed information on the purpose of trips, listing just “business” or “private” under purpose is no longer enough, please look to include addresses and names of clients, customers or sites.
If you are wondering how these changes might impact your business, we can help you.
what you need to do now
If you are a businessDEPOT client that employs staff, you will shortly receive our 2023 FBT questionnaire that outlines what you need to consider for the 2023 FBT year.
In the meantime, please ensure you record your car odometer readings [on all of your cars] on 31 March 2023 and that your logbooks have been prepared within the last 5 years.
we’re here to help!
Originally authored by Jacquii Reeves.
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The information provided on this website is a brief overview and is general in nature. It does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.