SHOULD YOU BE REGISTERED FOR FBT?
Generally, if you have employees, including directors, and you answer yes to one or more of the following questions then you are likely providing a fringe benefit and we would advise that you register your business for FBT. At any time from 1 April 2018 to date, did you:
- make vehicles owned or leased by the business available to employees for private use?
- provide loans at reduced interest rates to employees?
- forgive or release any debts owed by employees?
- pay for, or reimburse, any private expenses incurred by employees?
- provide a house or unit for accommodation to employees?
- provide employees with living-away-from-home (LAFH) allowances?
- provide entertainment by way of food, drink or recreation to employees (including Xmas parties)?
- provide any employees with a salary package (salary sacrifice) arrangement?
- provide any employees with goods at a lower price than they are normally sold to the public?
If you answered YES to one or more, then we will need to calculate any potential FBT liability, or seek to minimise it, either now or when we complete your 2019 year-end accounts.
It is unlikely you will have to worry about FBT if you’re only providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value. Please check out our factsheet – Why you should lodge an FBT return, even when no FBT is payable.
WHAT EMPLOYERS NEED TO KNOW ABOUT FBT 2019
We’ve outlined key issues for employers this FBT year in our factsheets – head over to our FBT resources page.
- Why you should lodge an FBT return even if no FBT is payable
- What items are indicators to the ATO that fringe benefits are being provided?
- Your benefits may be minor, but are they infrequent?
- New safe harbour provisions for ‘workhorse’ vehicles to reduce audit uncertainty for utes, dual cab utes, panel vans, etc.
- New measures to make log book requirements easier; and
- New rules for salary sacrificed meal entertainment benefits
- Associated leases and how they may help improve your family’s after-tax cash flow
KEY FBT HOUSEKEEPING TIPS AND REMINDERS
Whilst we do recommend that you register for FBT, and if applicable lodge a Nil return, should you decide not to there is still key information that we need you to record as at 31 March. We will then rely on this when we complete your 2019 accounts. Here’s a summary
- On 31 March and 1 April have your team take a photo of the odometer readings using their phones and email it to you, or to a nominated person to collate them all for you instead of running around to each vehicle and manually recording them.
- Carefully manage the private use of business cars, including the travel between home and work. The ATO is conducting a data matching program aimed at motor vehicles to capture benefits that aren’t currently being reported through FBT (if selected for review, the ATO will review your odometer readings and calculate the distance between your employee’s home and your office. If significant variances are identified a full ATO audit may follow).
- Review all meal entertainment expenses provided to employees, associates and clients and prepare a register that outlines the following for every event:
- The total cost (GST inclusive)
- How many employees were present & their names
- How many employees’ associates were present & their names
- How many clients were present (names not needed)
- The nature of the event (dinner, lunch, coffee, drinks, etc.)
- Are your employees actually living away from home or just traveling? The ATO is looking closely into taxpayers claiming LAFH allowances to ensure they aren’t incorrectly accessing FBT concessions. If they are taking ad hoc trips interstate they are probably just travelling and only entitled to travel deductions, not FBT concessions for LAFHA’s. If they are setting up a temporary home and keeps their ordinary home unrented when interstate, it is more likely they can access LAFHA concessions.
- Two laptops are better than one. If your small business turnover is under $10M, you can provide employees more than one work-related portable electronic device, if same or similar to that already provided in the same FBT year you still pay no FBT.
- From 1 April 2018 salary packaged meal entertainment and entertainment facility leasing expenses are included as reportable fringe benefits and are to be grossed-up using the 1.8868 gross-up rate.
- If your FBT liability was $3,000 or more last year, expect to pay your 2019 liability over four quarterly instalments.
- FBT Returns – $nil Liability returns should still be lodged, even where benefits are ‘cashed out’. Lodging a NIL return reduces the ATO’s period of review to 3 years and reduces the likelihood of audit.
We highly recommend that you action point 1 above at close of business 31 March for cars that are garaged on business premises. Alternatively, you should arrange for your employees to take a photo of their odometers when they finish their evening travels that night if the car is garaged at their home.
A decision on whether to register for FBT can then be made as late as 25 June 2019. Please note, if you decide to register and lodge a nil return and limit the ATO’s ability to retrospectively audit your business that we will need sufficient time before 25 June 2019 to process your return.
WHAT YOU NEED TO DO
- Complete the attached FBT Questionnaire, and relevant schedules for the period 1 April 2018 to 31 March 2019; and
- Return the questionnaire, schedules and any additional supporting documents to our office by 28 May for lodgment by 25 June 2019. Payment of any FBT liabilities are due before lodgment on 28 May 2019.
Should circumstances delay you sending us your information by this date, please let us know so we can apply for an extension.
Please feel free to contact us if you have any queries or would like any further information about the attached questionnaire.
We look forward to receiving your information.