To help you meet your Fringe Benefits Tax obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year.
SHOULD YOU BE REGISTERED FOR FBT?
Generally, if you have employees and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT.
It’s important you start gathering all the details of these provided benefits as soon as possible. Feel free to use our annual FBT Questionnaire and Schedules, so we can calculate any potential FBT liability and lodge your FBT return on time – payment and lodgement due 25 June 2021.
SHOULD YOU LODGE AN FBT RETURN EVEN IF NO FBT IS PAYABLE?
Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway? Our strong recommendation to you is yes, you should lodge an FBT Return, even if no FBT is payable.
This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you Fringe Benefits Tax and penalties.
WHAT ITEMS ARE EXEMPT FROM FBT?
If you are 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, you are unlikely to have to worry about FBT.
The exemption only applies if the benefits are both minor and infrequent. To find out if you pass of these tests, read our Minor & Infrequent Benefits Exemptions factsheet.
ARE THERE ANY SPECIAL COVID-19 EXEMPTIONS FOR FBT?
You may provide your employees with benefits you do not usually provide because of COVID-19. This includes paying for items that allow your employees to work from home.
Working from Home
You may have provided employees with items to allow them to work from home (or another location) due to COVID-19. Some items will usually be exempt from FBT if they are primarily used by your employees for work. This includes items like laptops, portable printers and other electronic devices.
Also, the minor benefits exemption or the otherwise deductible rule may apply if you:
- allow your employee to use a monitor, mouse or keyboard they otherwise use in the workplace, or
- provide them with stationery or computer consumables or pay for their phone and internet access.
You may need to pay Fringe Benefits Tax on items you give your employees to help protect them from contracting COVID-19 while at work, including gloves, masks, sanitisers and anti-bacterial spray.
However, these benefits are exempt from FBT under the emergency assistance exemption if you provide them to employees:
- who have physical contact with – or are in close proximity to – customers or clients while carrying out their duties, or
- are involved in cleaning premises.
Examples of this type of work include:
- medical (such as doctors, nurses, dentists and allied health workers)
- hairdressing and beautician
- retail, café and restaurant.
If your employees’ specific employment duties are not of the kind described above, the minor benefits exemption may apply if you provide an employee with minor, infrequent and irregular benefits under $300.
Motor Vehicles during COVID-19 restrictions
You won’t provide a car fringe benefit where a car is not applied for your employee’s private use or taken to be available for your employee’s private use.
During a period of COVID-19 restrictions, a car that you have provided to your employee is not taken to be available for your employee’s private use if all the following apply:
- the car is returned to your business premises
- your employee cannot gain access to the car
- your employee has relinquished an entitlement to use your car for private purposes.
You may have been garaging work cars at your employees’ homes due to COVID-19. You may not have an FBT liability depending on the type of vehicle, how often the car is driven, and the calculation method you choose for car benefits.
There are other COVID-19 FBT exemptions that may apply to you. Again we recommend that you complete our FBT Questionnaire and Schedules so we can review everything for you and advise you correctly to ensure you minimise any FBT payable.
WAYS YOU CAN REDUCE YOUR FBT LIABILITY
Here are some ways in which you can reduce your FBT liability:
- replace your fringe benefits with cash salary;
- provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
- look at providing benefits that are exempt from FBT; and
- use employee contributions. For example, an employee paying for some of the operating costs of a car fringe benefit, like fuel, that you don’t reimburse them for. But be aware that employee contributions will be deemed assessable income to you and subject to GST.
Head over to our FBT Resources page for the following FBT Factsheets:
- What is a Car Fringe Benefit?
- Employee Business Cars – Tips & Traps
- Entertaining, Meals & FBT – Tips & Traps
- Using an Associate Lease to boost family income
- Minor and Infrequent Benefits
- How the ATO identifies potential audits
- Why you should lodge a FBT Return
- Workhorse Vehicles and new Safe Harbour provisions
KEY THINGS YOU MUST DO ON 31 MARCH 2021
We strongly recommend that you register for FBT and, if applicable, lodge a Nil FBT Return. However, if you decide not to there is still key information that we need you to record at 31 March 2021. We will rely on this when we complete your 2021 annual Financial Statements. Here’s a summary of what you need to do:
- On Wednesday 31 March 2021, when they have finished their travel for the day, request your team each take a photo of their vehicle odometer readings using their phones and email the photo to you, or to a nominated person in your business to collate them all for you. Having these vehicle odometer readings for all business vehicles is vital to us being able to examine ways your FBT can be reduced.
- 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 you are selected for a review, the ATO will review your vehicle 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. Then prepare a register that outlines the following for every event:
- The total cost (GST inclusive)
- How many employees and their associates were present and their names
- How many clients were present (names not needed)
- The nature of the event (dinner, lunch, coffee, drinks, etc.)
The meal entertainment sheet on our FBT Resources page will simplify this for you.
The Fringe Benefits Tax year ends on 31 March 2021. Be sure to complete and return the FBT Questionnaire and Schedules to our office as soon as possible so you don’t miss the lodgement and payment date of 25 June 2021.
We will review these documents and then provide you with an up front price for our services before we begin any work, if you aren’t already paying for our FBT services within your monthly package.
We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability.