Fringe Benefits Tax (FBT) is a tax payable by employers for benefits paid to their employees or their employees' family or other associates . This is separate to income tax and is calculated on the taxable value of the fringe benefits provided. The FBT year runs from 1 April to 31 March.
Trade businesses, in particular, usually have vehicles or other assets that are used by employees for private purposes. It is important for business owners to identify this usage and report to the Australian Taxation Office (ATO).
The main assets or activities that attract FBT:
- Cars, Vans, Utes and other vehicles provided to employees or associates that are garaged off site and used for private purposes
- Certain car parks that are provided to employees and paid for by employer
- Tickets to sporting events and other entertainment activities
- Payment of employee's private expenses
What do you need to do about FBT as a business owner?
It is necessary to keep records of all fringe benefits provided to employees and associates. Some of the fringe benefits provided need to be reported on your employees' payment summaries. The taxable value of fringe benefits needs to be worked out and FBT is to be paid on grossed up value of the fringe benefits provided.
This might be a lot of information to try and absorb and understand on your own. If you are not a client of Tradies Accountant, we recommend that you speak to your accountant well before the end of the FBT reporting season, so that you can have your FBT returns lodged with the ATO on time . If you would like some help from us, our accounting team is more than happy to be of service so please, book a consultation.