Are you ready for the upcoming Fringe Benefits Tax (FBT) compliance season?
Just to recap, based on ATO’s definition, Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees – including their employees’ family or other associates. You may be required to pay fringe benefits tax (FBT) if you provide certain fringe benefits to an employee (or their associate) in respect of employment. The benefit may be in addition to, or part of, their salary or wages package. An employee can be a current, future or past employee, or a director of a company or trust.
Examples of fringe benefits include:
- allowing your employee to use a work car for private purposes
- giving your employee a discounted loan
- paying an employee’s gym membership
- providing entertainment by way of free tickets to concerts
- reimbursing an expense incurred by your employee, such as school fees
- giving benefits under a salary sacrifice arrangement with an employee.
If the above doesn’t apply to you, no need to worry about the upcoming deadline. If your company is applicable to the requirements of FBT, you should be starting to prepare your return.
But what do you need to be aware of? Are there any changes to the rules?
Let us break it down for you
The FBT rate is 47% for the 2018 FBT year ending 31 March 2018.
Three of the main changes for this 2018 FBT year are:
- businesses with a turnover of less than $10 million in the 2017 income tax year will now be able to provide exempt car parking fringe benefits for employees in the 2018 FBT year
- use of a new simplified method to calculate car fringe benefits on fleet cars
- use of a new proposed simplified method to determine if car related exemptions will apply (eg easier to determine allowable private use of certain utes, panel vans, etc).
For the 2018 FBT year (1 April 2017 to 31 March 2018), employers must pay FBT at a rate of 47% on the grossed-up taxable value of fringe benefits. The 2018 FBT returns must be lodged by 21 May 2018 (if lodging by paper) or by 25 June 2018 (if lodging electronically through a tax agent) and payment is due by 28 May 2018. [The payment date of 28 May is a fixed date regardless of when lodgment is (i.e. payment must generally be made by 28 May even if electronic lodgment using a tax agent only occurs after this date.]
What about records?
The FBT law, like all tax law, places importance on record keeping in order to calculate FBT. Records must be kept for 5 years after the end of the FBT year in which the benefit was provided. Note that, according to TD 2017/2, there is an exemption to keep such records in the 2018 FBT year for employers providing minimal fringe benefits (i.e. less than $8,393 in total fringe benefits) to their employees.
However, an employer using the log book / operating cost method to provide car fringe benefits must maintain a log book or e-log book for a continuous period of 12 weeks to calculate the percentage of private use (but see new developments relating to vehicle related exemptions below).
We hope that this brief overview gave you an insight into the complexities of FBT and what the current rules are. If you want assistance on this topic, please contact 02 4732 3844 or visit www.judgeaccountants.com.au.