FBT is the tax that you’re required to pay on any non-cash gifts that you give to your employee that are classed as part of their income – the specific laws for these are changing for 2024/25, so it’s key that you understand the following while you’re determining your FBT liability:
Car Fringe Benefits
Any electric vehicles that you give to your employees fall under FBT, but there are a few new amendments that would actually make this an FBT exemption:
- If it was bought after 1 July 2022 and below the LCT threshold, which is $89,332
- It’s legally classified as an electric car, meaning the battery is either a plug-in hybrid or hydrogen fuel cell
Keep in mind that you’re also going to need to use the logbook method for 12 weeks to properly calculate the FBT.
2024 and Beyond
The ATO is also going to audit some of the more common non-reporting areas, past returns, and industry comparisons so they can spot any unreported FBT liabilities – it’s crucial you learn what these are so you can avoid an unwanted tax audit:
Car Parking
You can only claim the ‘Car Parking Benefits’ exemption if you meet these conditions:
- You aren’t using a commercial car park
- You’re not a listed public company or Government body
- Your gross total income as an employer was less than $10 million for the last Income Year
Buying Motor Vehicles
Unless the car is strictly used for business, it’s not going to apply for an FBT exemption – meaning your employees cannot use it for private purposes.
That said, if you provided them with a Ute or dual cab for work, it can be exempt so long as the private use is both infrequent and irregular – it’s your job to keep adequate records to prove this.
Business Travel
Any employees of yours must provide you with some form of written evidence that substantiates their business travel claims unless it’s for a purchase under $10 or totalling less than $200 each year – private components of this business travel are not deductible, and they’ll also need to keep a travel diary for any trips that are exceed five nights.
Not Lodging FBT Returns
Lastly, employers need to double-check that they don’t have any FBT liabilities before lodging their FBT returns.
The following may potentially constitute a fringe benefit:
- Providing cars and car spaces
- Reimbursing private expenses
- Offering entertainment or employee discounts
Ensure FBT Compliance with Advisory One
With some of these new changes to FBT liabilities, it would be easy to accidentally slip up and find yourself no longer being compliant and under investigation – this can be easily avoided by having the right team by your side, so get in touch with our team of chartered accountants and certified bookkeepers at Advisory One today by calling 02 6324 5888.
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