Fringe benefits are an attractive way for employers to attract talent. Employers that provide fringe benefits to their staff are subject to Fringe Benefits Tax (FBT). Fringe Benefits Tax applies to all benefits paid to an employee, his or her family as well as any third party recipient (agreed between the employer and employee).
If you are an organisation or a business providing fringe benefits, you must register with the Australian Taxation Office (ATO).
Types of Fringe Benefits
Fringe benefits can include:
- Cars and car parking.
- Entertainment and related expenses.
- Housing, loans and debt waivers.
- Board expenses.
- Living away from home benefits.
The ATO has two other broad categories:
- Property (includes property, goods or shares), and
- Residual (any other category not covered above).
Who needs to pay Fringe Benefits Tax?
If you are providing benefits to employees you may be liable to pay Fringe Benefits Tax. An employee can be an ex, current or future staff member. Directors of a board or Trust are also considered as an employee for Fringe Benefits Tax purposes.
Benefits provided to volunteers of a charity are not liable for Fringe Benefits Tax.
Calculating Fringe Benefits Tax
Fringe Benefits Tax liability is self-assessed by the employer. The FBT year is 1 April to 31 March. You must keep all records of benefits. Records must be in English and retained for a five year period.
The ATO’s website provides a step-by-step guide on how to calculate your Fringe Benefits Tax. If you are still unsure, then seek the advice of a qualified professional.
Registering for Fringe Benefits Tax
Once you have determined that you need to pay Fringe Benefits Tax, you will need to register with ATO. Registration can be completed online using the ATO website.
All Fringe Benefits Tax returns must be lodged and paid during each FBT year (1 April to 31 March). Payments for FBT year ending 31 March must be made no later than 21 May. Lodgement and payments can be made online via ATO’s website. If you are using a tax agent, a different lodgement arrangement may apply.
If you are registered but did not make any benefits payment for the FBT year, you will still need to lodge a non-lodgement.
The ATO website has more information on Fringe Benefits Tax including information on FBT concessions. If you are unsure, seek professional advice. For personalised tax law advice, book an appointment with a tax lawyer.
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