Westcourt

Fringe benefits tax

ATO Fringe Benefits Tax

Many families in business typically see Fringe Benefits Tax as a “bad” thing. However, a creative tax strategy to your employment can help a business use fringe benefits tax to engage and motivate staff members.  Alternatively, the good use of systems and technology can streamline repetitive tasks and free up the internal finance team to do more profitable work rather than completing fringe benefits tax returns.

In essence, a fringe benefits tax is an employment tax. And our fringe benefits tax calculators are essential in understanding how the cost of fringe benefits tax impacts an employee’s remuneration package when modelling your HR and employment cost.

At Westcourt, we freely make available FBT calculators to assist our clients in making a cost-benefit approach to fringe benefits tax.

Importantly we understand that fringe benefits tax should be viewed as a total tax cost by looking at payroll tax, workers compensation insurance costs, super guarantee levy and the administrative costs of Single Touch Payroll. And we cast our mind to see how fringe benefits tax applies to:

  1. Motor vehicle fringe benefits;   
  2. Car parking fringe benefits (and the small business exemption applicable);    
  3. Entertainment fringe benefits;    
  4. Debt waiver fringe benefits;    
  5. Loan fringe benefits;    
  6. Housing fringe benefits (noting the FIFO exemption for remote workers);   
  7. Board fringe benefits;    
  8. Property fringe benefits;    
  9. Living away from Home Allowances;    
  10. Expense payment fringe benefits;    
  11. Car leasing fringe benefits; and   
  12. Residual fringe benefits.   

And while the above list can appear daunting, it is worth noting that there is a range of exemptions and benefits that can also help.  This includes the exemption for work-related items, retaining staff, emergency assistance, remote worker accommodation, minor benefits and safety payments.   

It is our deep expertise and single focus on emerging + middle market family businesses that gives us an edge in identify fringe benefits tax exemptions and technology to streamline systems that allows us to create true value and applying exemptions properly.

Further, avoiding fringe benefits tax can be appealing, but not all benefits can be avoided. So clear fringe benefits tax governance, systems, elections and records are needed to ensure that your private business can safely and adequately comply with the FBT regulations, including payroll tax, STP reporting, BAS preparation, and superannuation guarantee legislation.

In some instances, like employee share plans, the use and integration of fringe benefits tax law to the share plan can create an unusual outcome with no fringe benefits tax and no income tax to the employee. 

Why should I engage Westcourt for FBT advice? 

  1. Westcourt offers complimentary FBT calculators for decisions like a novated lease.   
  2. Westcourt has dedicated FBT specialists who champion FBT strategy and compliance.   
  3. Westcourt understands family employment dynamics within a private business and can leverage FBT law to family employment arrangements.   
  4. Westcourt uses the technology of Business Fitness and CCH IKnow for handy templates and checklists for your internal team to manage, control and understand your FBT obligations.   
  5. Westcourt is part of the GGI Global Alliance Network, which gives us access to local, on the ground employment tax advice for offshore employees.   
  6. Westcourt has a senior tax leadership role within the profession for taxes, including FBT, that can be leveraged into FBT solutions for your business. 

Frequently Asked Questions

Fringe benefits are non-cash benefits provided to employees in addition to their salary or wages. Fringe benefits can include a wide range of items and services, including: 

Cars: Providing a car for an employee’s use, either for private or work purposes. 

Loan of assets: Providing an employee with a loan of assets, such as money, property, or securities. 

Entertainment: Providing entertainment facilities, such as tickets to sporting events or concerts, to employees. 

Housing: Providing housing or accommodation to employees, either in the form of a rental property or as a benefit in kind. 

Travel: Providing travel benefits, such as flights, accommodation, or car hire, to employees. 

Expense reimbursement: Reimbursing employees for expenses incurred in the course of their employment, such as work-related travel expenses. 

Gift vouchers: Providing gift vouchers or other non-cash gifts to employees. 

Car parking: Providing car parking for employees, either on-site or at a location near their place of work. 

Fringe benefits are subject to Fringe Benefits Tax (FBT), which is a tax imposed on the employer. The FBT rate is currently 47% (as at 2022-2023 financial year), and the tax is calculated based on the taxable value of the fringe benefits provided. 

It’s important to understand that the rules and regulations surrounding FBT can be complex, and it’s a good idea to seek advice from a tax professional if you need help with your FBT obligations. A tax professional can help you understand your FBT obligations and ensure that you comply with the relevant FBT rules and regulations.

Fringe Benefits Tax (FBT) is a tax imposed on employers for the provision of non-cash benefits to employees. While there is no way to entirely avoid FBT, there are steps that employers can take to minimize their FBT liability, including: 

Structuring benefits correctly: Structuring benefits correctly can help to minimize the taxable value of the benefits and reduce the FBT liability. For example, providing benefits that are exempt from FBT, such as work-related expenses, can help to reduce the FBT bill. 

Keeping accurate records: Keeping accurate records of the benefits provided and the cost of those benefits can help to minimize the FBT liability. Employers should keep records of all benefits provided, including the cost of the benefits, the taxable value of the benefits, and the calculation of FBT. 

Seeking professional advice: Seeking professional advice from a tax professional can help to minimize the FBT liability. A tax professional can help you understand the FBT rules and regulations and ensure that you comply with the relevant laws. 

It’s important to note that the rules and regulations surrounding FBT can be complex, and it’s a good idea to seek advice from a tax professional like Westcourt if you need help with your FBT obligations. A tax professional can help you understand your FBT obligations and ensure that you comply with the relevant FBT rules and regulations. 

In conclusion, while there is no way to entirely avoid FBT, there are steps that employers can take to minimize their FBT liability.

Fringe Benefits Tax (FBT) is a tax imposed on the employer for the provision of non-cash benefits to employees. The employer is responsible for paying FBT on the taxable value of the benefits provided to employees. 

In other words, the employer is the taxpayer for FBT purposes, and the tax is calculated based on the taxable value of the benefits provided. The FBT liability is separate from the employee’s income tax liability and is calculated based on the taxable value of the benefits provided. 

It’s important to understand that the rules and regulations surrounding FBT can be complex, and it’s a good idea to seek advice from a tax professional like Westcourt if you need help with your FBT obligations. A tax professional can help you understand your FBT obligations and ensure that you comply with the relevant FBT rules and regulations.

Reportable Fringe Benefits (RFBs) are non-cash benefits provided to employees that must be reported on their Payment Summary (previously known as Group Certificate) and included in their taxable income. RFBs are subject to Fringe Benefits Tax (FBT), which is a tax imposed on the employer for the provision of the benefits. 

Examples of RFBs include: 

Cars: The use of a car provided by the employer for private or work purposes. 

Loan of assets: The loan of assets, such as money, property, or securities, provided by the employer. 

Housing: Housing or accommodation provided by the employer, either in the form of a rental property or as a benefit in kind. 

Travel: Travel benefits, such as flights, accommodation, or car hire, provided by the employer. 

Expense reimbursement: Reimbursement of expenses incurred by the employee in the course of their employment, such as work-related travel expenses. 

It’s important to note that the rules and regulations surrounding RFBs and FBT can be complex, and it’s a good idea to seek advice from a tax professional if you need help with your FBT obligations. A tax professional can help you understand your FBT obligations and ensure that you comply with the relevant FBT rules and regulations.

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