10 Fringe Benefits Tax Facts (And What They Mean For You)

It’s just about time to file your Fringe Benefits Tax (FBT) return. The Fringe Benefits Tax year ends 31 March, so we’ve put together a handy list of 10 FBT facts to help you pull together the information you need to meet your obligations. Let’s get started.

 

Fact #1: Fringe Benefits Include an Array of Items

The most common fringe benefits include motor vehicles, housing benefits, debt waivers, living away from home allowances (LAFHA), expense payments on behalf of staff, interest free loans, and parking benefits. This isn’t a comprehensive list, however. If you’re unclear about the status of a benefit, contact us for advice.

 

Fact #2: Most Employers Provide Fringe Benefits for their staff

If you think FBT doesn’t apply to your business, it would be wise to double check as most businesses with employees will be involved in the FBT system. If you’re unsure about whether or not you offer fringe benefits feel free to contact us with questions.

 

Fact #3: Entertainment Should Be Split Between Staff and Clients

When expensing entertainment for your FBT report, you should split expenses between your staff and clients. This can be done on a “per head” basis. This allows you to be specific in your designation of entertainment expenses. You can reduce down for minor items like a staff Christmas party before paying FBT.

 

Fact #4: A Log Book Can Reduce Your Costs

For your car fringe benefits, keeping a log book allows you to use the operating cost method, which can reduce your FBT. It’s true that you can use the flat 20% option, and this is certainly less time-consuming, but in most cases you’ll end up paying more.

 

Fact #5: Report Fringe Benefits That Exceed the Reporting Threshold

For the FBT year ending 31 March 2017, you only have to report fringe benefits that exceed $2,000 in taxable value or $3,921 in grossed-up value. These amounts haven’t changed from the FBT year ending 31 March 2016.

 

Fact #6: Car Depreciation Rates are Based on the Car Purchase Dates

Under the operating cost method, you may depreciate cars based on the date the cars were purchased. For cars purchased on or after 10 May 2006, the depreciation rate is 25%.

 

Fact #7: Portable Electronic Devices May Be Exempt

When an employee salary sacrifices for a portable electronic device (like a laptop) that is primarily used for business purposes, it’s exempt from FBT. Remember, however, that if a second portable electronic device is salary sacrificed during the year that is substantially identical, it will not be exempt from FBT.

 

Fact #8: FBT May Apply to Novated Leases

Novation agreements between employees, employers, and leasing companies have become increasingly popular, and many people think that this arrangement exempts them from paying FBT. Depending on how the agreement is structured, FBT may still apply. Be sure to keep records of all expenses paid by you outside of the novation agreement.

 

Fact #9: Minor Benefits are Exempt from FBT

Benefits under a GST inclusive value of $300 are exempt from FBT, as long as they’re provided on an infrequent or irregular basis. So, for example, if you give an employee a ham or bottle of wine for Christmas, it’s not subject to FBT.

 

Fact #10: The FBT Due Date is 21 May 2017

While the FBT year runs from 1 April to 31 March, the statutory due date for lodgment and payment is 21 May if it’s lodged by paper and 25 June it’s lodged electronically. Payment under the lodgment program remains as 28 May.

If you have questions about FBT or what your business can do to reduce expenses related to FBT, contact us at Altus Financial. We’re here to help you prepare all of your fringe benefits tax documentation.

Download the Questionnaire and Declarations here and the Excel Workbook here.