Easter is coming! And so it is Fringe Benefits Tax time.
(Insert applause).
We know. It’s not half as exciting, is it?
Yet it is all just as important as unwrapping those golden chocolate eggs on Easter Sunday.
We’ll leave those visions with you but for now, back to FBT.
What is Fringe Benefits Tax?
Fringe Benefits Tax, known as FBT is a tax paid by employers in Australia for providing non-cash benefits to their employees.
It is separate from income tax and is calculated on the taxable value of the fringe benefit.
Confused? That’s ok, it is a tricky one.
Think of it as all those perks your employer may offer you that is everything EXCEPT cash.
Think company cars, health insurance, gym memberships, weekly spa sessions (ok we are stretching it here a little) and other perks.
Some benefits such as work-related items including laptops and tools are exempt from FBT and some benefits are subject to a lower FBT rate.
The bottom line is can cost companies a LOT of money.
The ATO will calculate all those perks you pass on to your employees which is an added benefit to them outside of their wages.
Then they’ll slug you a tax for them.
Who can receive a fringe benefit?
Here’s the thing. It’s not only employees who can benefit. It can be your whole clan!
FBT can be applied to employees and even their families or other associates. Not only that, an employee can also be current, future or past (anyone have a friendly ex-boss giving away perks? Didn’t think so).
Others who can benefit from a fringe benefit are Directors of a company or a beneficiary of a trust who works in the business.
How is FBT calculated?
FBT is calculated based on the taxable value of the fringe benefits provided to employees during a given financial year.
To calculate your FBT payable, 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.
The FBT deadline
The 2024 FBT deadline falls on 31st March, 2024.
Yes, that IS legitimately Easter Sunday.
What are employers required to do?
Firstly, you need to register if you provide FBT to your employees.
Secondly, lodge an FBT return with the ATO by 21 May 2024, covering the period from 1 April 2023 to 31 March 2024.
Overall, FBT is an important consideration for employers in Australia who provide non-cash benefits to their employees.
By understanding the tax and its implications, employers can ensure they remain compliant with Australian tax law and provide their employees with valuable fringe benefits.
Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 27 years’ industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.