It is that time of year again; the Fringe Benefits Tax (FBT) season is coming to an end. And with the ATO announcing their increased focus on FBT in recent years, including audit activity, it pays to get this right.
To assist with making sure you are compliant, please take note of the information below. Further to this, we will be in contact with those who we are aware have FBT obligations. However, in the interim, if you believe you may now have FBT obligations (but not previously), or you have any questions about FBT, please contact us.
What To Do?
In preparation for FBT return for the year ended 31 March 2024, be sure to:
- Have motor vehicle logbooks up to date;
- Take note of closing odometer readings as at 31 March 2024.
How Do I Know If I Need To Pay Or Consider FBT?
If you are not sure whether you are providing fringe benefits to your employees, here are some key questions you should ask yourself:
- Do you have vehicles either owned or leased by a business, that are available to employees for private use?
- Does your business provide entertainment by way of food, drink or recreation to employees?
- Has your business forgiven any debts owed by employees?
- Does your business provide loans at reduced interest rates to employees?
- Has your business paid for, or reimbursed, any private expenses incurred by employees?
- Does your business provide a house or unit of accommodation to employees?
- Does your business provide employees with living-away-from-home allowances?
- Do any employees have a salary package (salary sacrifice) arrangement in place?
- Has your business provided employees with goods at a lower price than they are normally sold to the public?
A common area of confusion is motor vehicles. Where a motor vehicle is owned or leased by a business but is used by an employee for private purposes (including travelling between home and the workplace), then FBT is an issue that needs to be managed. The Tax Office will once again be specifically targeting motor vehicles that are owned by businesses, so it’s important to identify any potential FBT issues before the Tax Office does.
Another common area of confusion is entertainment. Entertainment can be almost anything from food, drink, and recreation – such as movie tickets, to non-work-based trips. If you provided any entertainment benefit to employees, such as an employee attending a business lunch, then FBT potentially applies. Entertainment is an area of continued focus for the Tax Office, as the FBT treatment also interacts with the treatment of expenses for income tax and GST purposes.
What Is Exempt From FBT?
Certain benefits are excluded from the scope of the FBT rules. The following work-related items are exempt from FBT if they are provided primarily for use in the employee’s employment:
- Portable electronic devices (e.g. laptop, tablet, mobile, PDA, electronic diary, notebook computer, GPS navigation device) that are provided primarily for use in the employee’s employment (limited to the purchase or reimbursement of one portable electronic device for each employee per FBT year);
- An item of computer software;
- Protective clothing required for the employee’s job;
- A briefcase;
- A calculator;
- A tool of the trade.
Electric Vehicles (EVs)
Electric Vehicles (EVs) introduce significant changes to the valuation of car fringe benefits for employers preparing their 2024 FBT returns. The Treasury Laws Amendment Act 2022 offers an FBT exemption for eligible EVs, subject to specific criteria such as meeting the car definition under FBT legislation and having a retail price below the luxury car tax threshold. Recent developments include the release of a Practical Compliance Guideline by the Australian Taxation Office (ATO) for calculating electricity costs when charging EVs at home. Additionally, considerations regarding in-home charging equipment and replacement batteries highlight potential tax implications, distinguishing between taxable property and exempt car expenses based on performance upgrades.
Changes To Fringe Benefits Tax Record Keeping
From April 1, 2024 (next month i.e. next FBT year), changes to fringe benefits tax (FBT) record keeping grant employers the option to rely on alternative records, as authorised by the Commissioner of Taxation. This measure, now law, applies from the 2025 FBT year onward. Employers may choose to use existing records instead of travel diaries or employee declarations for certain benefits, provided the Commissioner specifies acceptable alternative records via the legislative instrument. Despite this change, the information required to support FBT returns remains consistent with FBT law.
If you need to speak with a professional, contact support@walkerhill.com.au today!
