The ‘FBT gap’ is currently around $1.3 billion, according to the ATO, and as such, they’re planning on cracking down on employers and enforcing more stringent rules regarding FBT compliance – here’s what you need to know:
Is It Worth Registering for FBT?
If you provide the following to your employees, even your directors, then you’ll most likely be giving them a fringe benefit that necessitates FBT registration for your business:
- Cars and car parking
- Employee discounts
- Entertainment (which includes food and drinks)
- Loans
- Reimbursements for private expenses
Do I Really Need to Lodge My FBT if I Don’t Have Any FBT Liabilities?
Legally speaking, there isn’t actually any need to lodge your FBT return when you don’t have any FBT to pay, but we’d generally recommend lodging it anyway if you provide any kinds of benefits to your employees.
That’s because it means the ATO can only possibly audit you for the last three years since the most recent lodgement – if you don’t bother with this, it means they’ll be able to go back indefinitely to audit your company, where they might even up finding something to charge you for in the past and penalise you.
Are There Any Items That Are Exempt From FBT?
Although it’s not always guaranteed, you shouldn’t expect the following items to be subject to FBT:
- Portable printers
- Tablets
- Mobile phones
- Protective clothing
- Laptops
- Tools of trade
- Minor and infrequent benefits that don’t exceed $300 in their value
Things like the minor and infrequent benefits usually refer to personal use of company vehicles and flights, but we’d suggest contacting one of our chartered accountants to clarify whether your usage constitutes this.
How Am I Able To Reduce My FBT Liability?
Firstly, we’d recommend replacing any of the fringe benefits that you provide to your staff with a cash salary instead, as this makes it a lot easier to stay compliant with tax laws in general.
If you insist on providing some form of benefits to your staff, just make sure they’re the kinds of benefits your employees are obliged to claim as an income tax deduction (if they needed to purchase these benefits on their own) – you could also provide the kinds of benefits we mentioned earlier that are explicitly exempt for FBT.
Finally, you could also consider using employee contributions – one of your employees who pays for operating costs like fuel on their car fringe benefit, for instance. This way, you wouldn’t need to reimburse them for some of those costs. Just keep in mind that these employee contributions will be classed as assessable income for you and, therefore, subject to GST.
Ensure Full FBT Compliance With AdvisoryOne
In order to avoid unwanted audits into your business, make sure you’ve got all the support you need by partnering with our elite team of chartered accountants and certified bookkeepers – get in touch today by calling 02 6324 5888.
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