It’s nearly new years! Wait, 1st Jan? No, not that new years.
New financial year? No, not that one either. Chinese new year? Um, no.
1st April is actually a new Fringe Benefits Tax (FBT) year.
Yep, tax season isn’t only limited to 1 July.
Some businesses deliberately offer fringe benefits as part of salary packaging for certain employees (especially not-for-profits), with many even using external providers to manage the process. However, for others, fringe benefits remain a mystery.
But before you say “FBT doesn’t apply to me,” it’s worth pausing to think about whether there might be some fringe benefits hidden in your P&L.
Even if you don’t deliberately set out to give your employees fringe benefits, there are so many types of benefits that can exist, even if its unintentional. To be sure you haven’t missed anything, check out the following lines in your P&L :
- Motor vehicle expenses: Do any of your employees have the opportunity to use a company-owned vehicle for private use? It doesn’t even matter if they use it or not – its about having the opportunity to use it. So, if a vehicle is garaged at an employee’s home overnight, it is likely a fringe benefit.
- Entertainment: It’s a very fine line between providing routine staff amenities and providing an entertainment fringe benefit. There’s no absolute definitive guide, but factors such as where the benefits are provided (off-site entertainment is more likely to be a fringe benefit) and what type of entertainment (for example, if alcohol is involved it is more likely to be a fringe benefit) should be considered.
- Parking: If your employees can park their car at work in a space that you own or control, and you are nearby to commercial parking stations, you may have a parking fringe benefit. There are some exemptions for small businesses and charities, but it’s better to check.
- Travel expenses, General expenses: Basically, anything of a personal or private nature can be a fringe benefit, and P&L items like Travel and “General” tend to be rife with expenses that aren’t completely work-related. Reimbursing employees for work-related expenses is fine, but when you’re paying for employees to engage in leisure travel or meet their own personal expenses, a fringe benefit might be triggered.
Too many businesses just assume they don’t offer any fringe benefits simply because they don’t intend to offer them, or because “we’ve never done an FBT return before.” Unfortunately, however, ignorance and assumption are not an excuse as far as the Australian Taxation Office (ATO) is concerned.
Not sure if you may have triggered a fringe benefit?
First, talk to us about it to get more information and advice.
Second, better to lodge an FBT return just to be safe, as this limits the ATO’s ability to audit you; but more information regarding this will be in our next instalment.