There are plenty of important dates to remember where the ATO are concerned, and the Fringe Benefits Tax of FBT year end is one of them. The FBT year runs from 1st April each year to the 31st March the following year.
So what is FBT?
There are some benefits that employers give to their employees that have a monetary value. These benefits are given in addition to or as part of their salary or wages. Because they have a monetary value attached to them they are taxed, but separate to your income tax, in the form of FBT or Fringe Benefits Tax. As an employer you need to be aware of benefits that your employees are being given and ensure that the appropriate tax is calculated and paid to the ATO.
Here are some of the ATO hot spots when it comes to FBT and what you need to be aware of:
1. Company cars
You might provide employees with a company car, but if that car is being used for any personal use whether it is on the weekends, picking up kids from school, shopping or used by another person then it will incur FBT. Even being garaged at the employees home overnight is considered for tax purposes as being available for personal use regardless of whether it is or not.
2. Utes & Commercial vehicle exemption
The exception to the motor vehicle FBT liability and subject to certain limitations, is when the vehicle is a ute or other commercial vehicle, provided the personal use is infrequent or limited. It needs to be a vehicle provided for work purposes and not part of a salary sacrifice, have no non business accessories fitted such as a child safety seat, and the value of the car can’t exceed $75,526 for fuel efficient vehicles or $65,094 for other vehicles.
To determine the infrequency of the personal use the ATO rule is that travel between their home and work is covered and any diversion for personal use can’t add more than 2 kms to that ordinary trip. They can’t travel more than 750km in total each FBT year in wholly private trips and no single journey exceeding 200kms. Records would need to be kept to prove that this was being adhered to.
3. Car parking values
If you are providing parking to your employees then it needs to be declared at the true market value of that parking. The ATO is finding that many employers who are providing on site parking to their employees are declaring the value of this well below market value of parking in that area.
When calculating the value of car parking you need to look at other parking available within a 1km radius of the parking you are providing. You may be required to provide evidence of rates you have used to determine the value of your parking.
4. Allowances when living away from home
As a general rule FBT applies to the full amount of the allowance paid. However, if some strict conditions are satisfied then the taxable value can be reduced by the accommodation and/or food component. Some common issues include misunderstandings between when an employee is living away from home as opposed to travelling for work.
5. Registering & housekeeping
If you have employees and you provide cars, car spaces, reimburse private expenses, provide entertainment such as food and drink and employee discounts then you are providing a fringe benefit and should be registered for FBT. If you provide only exempt items such as laptops, iPads, protective clothing, tools of trade or items under $300 in value then you are unlikely to have to worry about FBT.
If you provide cars then you need to make sure that you are recording odometer readings at the beginning and end of the FBT year.
If you have any doubts about FBT talk to our team. Our tax experts will be able to help you navigate what your obligations are and ensure you meet this in a timely way.