What are Fringe Benefits?
A fringe benefits is an employee perk. Generally, these benefits can be a good draw card for attracting new staff, outside of the salary package you offer. They add value to a role and make employees feel valued and appreciated. As such, fringe benefits are a good tool for helping with employee retention. A company car used for private purposes, private health cover, gym membership or a low interest loan are all examples of Fringe Benefits.
What is Fringe Benefits Tax?
Fringe Benefits Tax, commonly referred to as FBT, is a tax payable by employers for benefits provided to an employee or their relatives in place of salary or wages. This is separate to income tax and is calculated on the taxable value of the fringe benefits provided. This is a complicated area and you need to register for Fringe Benefit tax and understand the taxable value for each benefit you pay. In addition, it is not always easy to establish what does and what does not constitute as something that would be liable for Fringe Benefits Tax.
Getting FBT right!
It’s important that you keep good records of all the Fringe Benefits you pay to your employees. You should also ensure that any associates that provide a benefit to an employee of yours, supply you with a record of it. Unlike the income tax year, the FBT year runs from 1 April to 31 March, though you may get an extension once registered with a tax agent.
It’s an area of tax that many business owners have trouble understanding and getting right when they go it alone. Due to considerable confusion surrounding Fringe Benefit Tax and liability, it’s a good idea to invest in the services of a tax agent. And not just the cheapest agent you can find. No one wants to discover they owe a hefty FBT bill further down the track due to incorrect reporting or bad advice.
Make sure you know if and when you should register for FBT with the right advice from the right tax agent.
Where to start?
Start by talking to a professional! Our in house tax specialists can advise you of your obligations and, if required, assist you with Fringe Benefits Tax registration.
Give us a call on 1300 174 689 for an obligation free chat, or if you prefer click here to fill in our online contact form.
Further reading: https://www.ato.gov.au/General/Gen/FBT-fact-sheet/