Are you aware what might trigger this extra tax for your business and just how costly it could be?
ATO says:
Fringe benefits tax (FBT) is a tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates. If you’re a sole trader or a partner in a partnership, you are not an employee. Benefits you provide to yourself are not subject to FBT.
FBT is separate to income tax. It’s calculated on the taxable value of the fringe benefit.
As an employer, you must self-assess your FBT liability for the FBT year (1 April to 31 March). If you have an FBT liability, you must lodge an FBT return and pay the FBT you owe. Your tax accountant can help you with the calculations and documentation.
What is a fringe benefit?
A fringe benefit is like a payment to an employee, but in a different form to salary or wages.
There are different types of fringe benefits. Examples include:
– allowing an employee to use a work car for private purposes
– car parking
– paying an employee’s gym membership
– providing entertainment by way of free tickets to concerts
– reimbursing an expense incurred by an employee, such as school fees
– giving an employee a discounted loan
– giving benefits under a salary sacrifice arrangement with an employee.
Who pays FBT?
The employer pays FBT. This is the case even if the benefit is provided by a third party under an arrangement with the employer.
How much FBT do you pay?
To work out how much FBT to pay, you ‘gross-up’ the taxable value of the benefits you’ve provided. This is equivalent to the gross income your employees would have to earn, at the highest marginal tax rate (including the Medicare levy), to buy the benefits themselves.
FBT can be quite costly, those employee perks might cost you a lot more than you anticipated or budgeted for!
Check the ato website to work it out for yourself https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/how-fringe-benefits-tax-works
Or speak to your tax agent about your situation and what exemptions might apply. They may also assist you to make smarter decisions to avoid future lodgements and liabilities.
