Fringe Benefits Tax year ends 31 March 2022
The Fringe Benefits Tax (FBT) year ends 31 March 2022, business owners should ensure they have all their FBT obligations in order.
The ATO monitors this area closely and it is an area that most of us find confusing and complicated. Below is a list of things to consider each year:
Should my business be registered for FBT?
If you have directors, employees, or family members of the that are provided with benefits such as car parking, cars, loans, entertainment (food and/or drink); discounts etc, then it is likely you may need to be registered for FBT. Please speak with us if you are in this category.
If you do need to lodge a FBT Return, we will ensure you have all the correct documentation required to support your return. For lodgement of your return via a tax agent, such as Mulcahy & Co, the due date is 25 June 2022. If you lodge your own via paper, the due date is 21st May 2022.
Exemptions from FBT
There are items that are exempt from FBT such as work-related electronic devices (mobile phones, laptops, tablets), computers, tools of trade and some minor and infrequent benefits that are less than $300 in value. You can only provide one portal electronic device, unless you are a small business, where you can provide multiple work related portable electronic devices.
Common misconceptions with FBT
Often business owners believe they can claim a multiple of expenses, only to find they are not deductible or incur fringe benefits tax. Examples of these are as follows:
- A ‘business lunch’ out with a client
- Business vehicles garaged at employee’s residences
- All vehicles are treated the same – in fact in majority of cases, a logbook is required to be maintained for a continuous period of at least 12 weeks.
- Business meals, Christmas, and other social functions
- Friday night drinks or similar events
We can provide further clarity about your situation and what records you need to be keeping.
Ways to reduce your FBT liability
Below are some ways in which you can reduce your FBT liability:
- Replace your fringe benefits with cash salary
- Consider whether you should be purchasing vehicles that have some private use in your personal names instead of your company or trust.
- Provide benefits that your employees would be entitled to claim as a tax deduction if they had paid for it themselves.
- Provide benefits that are exempt from FBT
- Use employee contributions - an employee reimbursing for the private portion of the costs. Please note, this is assessable income to you and subject to GST.
- Prepare logbooks on vehicles where required and keep odometer records as at 31 March 2022 each year on all vehicles.
- Keep a record of entertainment expenses including who attended and what food and drink was provided.
If you have any questions regarding FBT or require any assistance, please contact your Mulcahy & Co Advisor.
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