You’re doing the best for your employees by discussing salary packaged arrangements. But don’t forget about your Fringe Benefits Tax liability for car parking, meal entertainment, covering costs when they’re living away from home and so many other FBT categories. Don’t worry, we can help with all of that!
One of the challenges of paying the correct FBT year on year is the fact that these FBT rates apply to so many aspects of your business. And then there are certain FBT exemption rules that you may not even know of. It’s hard to keep track!
Firstly, don’t think you can simply skip this responsibility. Fringe Benefits Tax is a tax with stringent guidelines and if you take the chance of simply submitting a nil Fringe Benefit Tax return, you’re bound to get audited.
Secondly, you may think the three-year amendment rule protects you. But that only applies to business owners who did lodge an FBT return at some stage. So, if you don’t have a proper system in place soon, you risk getting into a dispute with the Australian taxation office.
All of this stress is unnecessary, because the Superior B+T team wants to help you get it sorted.
With each team member at your company, as part of the process of employment of the employee, you would discuss a salary package. For a salary sacrifice, employers can cover certain expenses on the worker’s behalf. In reality, the employee still receives payment, but not as part of his or her salary. This is called fringe benefits.
Common fringe benefits include:
Car fringe benefits when an employee is allowed to use a company car
Covering expenses, such as school or membership fees
Loans between the company and the employee
Entertainment benefits, such as concert tickets
This salary packaging results in tax benefits for the employee, but the employer is liable for tax payments on certain of these benefits.
The guidelines for the taxable value of the fringe benefit you need to mention on your business tax return, are quite extensive. Below is a list of excluded fringe benefits. You usually don’t have to include them in your total taxable amount because they carry 0% FBT liability. Just note that in some cases this may change and you will be taxed when a threshold amount is exceeded:
Basic salary or wages
Food and drink expenses
Allowances for housing in remote areas or when an employee lives away from home
Expenses when an employee relocates
Benefits of $300 or less that employees don’t incur often
Clothing and tools required for work
Work accessories including briefcases, mobile phones and some other electronic devices
Purchasing shares, but in certain contexts only
Volunteers or contractor benefits
Gifting or payments upon an employee’s contract termination
It can be challenging to navigate the guidelines and do accurate calculations, since many factors are at play:
You may think you’re exempt from paying FBT, but upon a closer look of payment summaries you’ll see your benefits to a certain employee exceeds 2,000 dollars. This can immediately require you to report those fringe benefits.
For each year you must make an accurate calculation, using FBT rates, for relevant amounts for the period 1 July to 30 June.Laws apply to all current employees but also those from the past and future employees.
To calculate the fringe benefit tax amount relating to car FBT, you can use either a statutory formula or the operating cost method. Without the necessary insight, it can be challenging to identify the most beneficial option for your business.
There are numerous guidelines describing how laws apply to health care expenses and expenses relating to a family member of an employee.
In addition, from time to time there are amendments, such as the lifting of exempt benefits on laptops that took place in 2008 and a meal & entertainment adjustment in 2016.
These facts showcase just some of the reasons why businesses now opt for a tax expert to manage fringe benefit tax on their behalf. Can we do the same for you?
Instead of wasting time and effort trying to manage your fringe benefit tax each year, why not trust an experienced team? The structure and insight we provide will ensure fringe benefits tax FBT problems never hamper your workflow again.
We’re here to supply you with all the answers you need regarding FBT. Make your future salary package decisions based on sound knowledge and insight.
Our team stays up to date with all the latest developments regarding fringe benefit tax. Our calculations will be accurate, ensuring you’ll be in the clear if an audit is done.
We invest time and effort in each client’s case. Our goal is to make sure you don’t pay more than you have to, so we’ll consider each exemption possible, while making sure you align with tax laws.
Planning to employ a new team member? We’ll help you create the best options for salary packaging options, that benefit all parties involved.
Allow us to take care of communication with the Australian tax office and even your employees. Our in-depth knowledge about FBT streamlines conversations and prevents misunderstandings.
Each business decision you make will affect your business growth and future success. Let’s help you take care of this extremely important aspect of your tax return responsibilities, so you don’t risk your business reputation or your bottom line.
Life as a business leader can be easier than you think and you CAN achieve the goals you’re after.
We help you get there.