If you’re a business that employs staff, it’s time to consider what fringe benefits you’ve provided to employees during the Fringe Benefits Tax [FBT] year. Unlike the financial year, the FBT year runs from 1 April 2023 – 31 March 2024 and FBT continues to be an area of focus for the Australian Taxation Office [ATO].  

Here’s what you need to know to ensure your business meets its tax obligations.

 

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. 

 

Who does it apply to? 

A fringe benefit can be provided to employees, contractors and directors.  

Fringe benefits may also be provided to your staff by third party organisations. For example, if one of your sales staff receives a non-cash reward from a third party for bring the best seller of their products in a quarter, you as the employer may need to pay FBT on the reward! 

 

Most common fringe benefits 

The common types of benefits we see are: 

  • Provision of cars to employees [this includes Utes and some work vehicles!] 
  • Entertainment such as lunches, after-work drinks, Christmas parties or corporate boxes 
  • Gift cards and anniversary gifts 
  • 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 help determine this with you. 

 

When 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 a requirement. For the 2024 FBT year, your return must be lodged on or before 25 June 2024 if lodged electronically via a tax agent or 21 May 2024 if 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. 

 

How can I reduce my FBT liability? 

There are a few common exemptions that might apply to your business. These are: 

Minor benefits – Costing less than $300 including GST per person and provided on an infrequent and irregular basis [E.g. Christmas hampers which generally cost less than $300 per person and only occur once a year]. 

How often is ‘minor’ and ‘infrequent’ when applying the minor benefits exemption? While there is no definitive legislation covering this, we recommend limiting the occurrences to less than 10 as a guideline.  

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 are the key risk areas for the 2024 FBT year? 

Independent contractors – this is a key focus are of the ATO and there’s new guidelines on when a person is an employee or contractor for FBT purposes. The ATO is scrutinising benefits that have been provided to contractors and whether they should be considered an employee for FBT purposes because if so, the benefit is subject to FBT. 

Record keeping requirements – it’s imperative you maintain the correct records for FBT purposes to ensure that in the event of ATO activity you are able to justify the treatment of your fringe benefits. A few examples include: 

  • Employee declarations of private use 
  • Logbooks for motor vehicles [the ATO has recently updated their guidelines on the level of detail required in order for a logbook to be considered valid] 
  • Receipts for meal expenses, including identifying the staff and clients who attended 

Utes and work vehicles – just because a vehicle might be used for work purposes does not mean it’s exempt from FBT by default.  

Car charging stations for electric vehicles – where you install a charging station in an employee’s home, this is subject to FBT. This is the case even if the electric vehicle itself is exempt from FBT! 

If you’re wondering how these changes might impact your business, get in touch. 

 

what you need to do now 

If you are a businessDEPOT client that employs staff, look out for our questionnaire [that outlines what you need to consider for the 2024 FBT year] landing in your inbox soon. 

If you’re not an existing client but would like some help with lodging your FBT return, give our accounting team a buzz on 1300BDEPOT or oneplace@businessdepot.com.au.

 

In the meantime, please ensure you have recorded your car odometer readings [on all your cars] on 31 March 2024 and that your logbooks have been prepared within the last 5 years. 

 

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general advice disclaimer

Business Depot Financial Planning BNE Pty Ltd ABN 27 644 561 400 and its advisors are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL No. 357306.

The information provided on this website is a brief overview and 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.