Fringe benefits tax (FBT) is applied to the perks you offer your employees. These can range from providing company cars that employees can use privately to offering a low-interest loan or monetary bonus.
Between 31 March 2021 and 2025, FBT is charged at a 47% rate, but the amount you pay is subject to current updates, initiatives, reductions, and exemptions. As we embark on a new FBT year (1 April to 31 March), it is a good time to share a few friendly pointers on meeting current FBT obligations.
Let’s get into it!
- Follow Updated FBT Record-Keeping Protocols
From April 2024, you have the choice of submitting your business records instead of employee declarations when lodging FBT.
The initiative (laid out in the latest update to the Fringe Benefits Tax Act 1986) only applies when the Commissioner specifies which information is deemed necessary in place of the declarations.
- Understand Car Parking Benefits Updates
The ATO could deem private company car parks as a fringe benefit following updates to chapter 16 of the FBT Guide For Employer legislation. In short, employees and associates (such as immediate family members) who use the car park for personal use trigger FBT.
Picture a scenario where a full-time employee visits the area where their workplace is located at the weekend and uses the company’s private car park. The ATO could perceive this as a fringe benefit because it offers the employee a personal advantage.
- Exclude Electric Vehicles (EVs)
The Australian Taxation Office (ATO) maintained the EV exemption on all vehicles purchased from July 2022. The initiative doesn’t cover electric or low-emission trucks, scooters, bikes, and motorcycles.
FBT usually applies when employees use business-owned cars to perform personal tasks, like shopping or travelling.
With this exemption, you can provide EVs with zero or low emissions to employees and their immediate associates without falling liable to FBT. You must have collected and used the car on or after 1 July 2022 to be eligible.
Despite the above, you must still report the EV on respective employees’ income statements for full transparency with the ATO.
The exemption doesn’t cover EVs linked to luxury car tax applied to vehicles priced at $84,916 in 2022–2023 and $89,332 in 2023–2024.
- Consider the New Loan Fringe Benefit Interest Rates
Low-interest loans occur when you lend money to an employee at an interest rate below the statutory amount. As of April 2024, the statutory rate increased from 4.52% in March to 7.7% in April.
Although you are welcome to charge interest below these rates, the ATO will apply FBT on the loan.
Let’s Simplify Fringe Benefits Tax Together
Our Advisory One team is driven, not just by helping you meet your tax obligations, but helping you organise your finances strategically. Contact us to learn more about our business and individual accounting services to get on top of FBT!
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