FRINGE BENEFITS TAX GUIDE

FRINGE BENEFITS TAX GUIDE

FRINGE BENEFITS TAX GUIDE

The 2020-2021 Fringe Benefits Tax (FBT) year ended on 31 March 2021 and assesses a business’s obligations for the period 1 April 2020 to 31 March 2021.

What is a Fringe Benefit?

A Fringe Benefit is a benefit provided to employees and directors, including their associates, which does not form part of their normal salary or wages.

Examples of common Fringe Benefits include:

  • Using a work car for private purposes
  • Entertainment paid for by the business
  • Reimbursement of non-deductible expenses

If your business has provided any of the above benefits then a FBT return may be required to be lodged with the ATO by 25 June 2021.

FBT Rates & Thresholds

  • FBT tax rate is 47% of the grossed up taxable value
  • If an employee has been provided with a Fringe Benefit with a taxable value of more than $2,000 then you are required to disclose the grossed up taxable on the employee’s payment summary
  • Benchmark interest rate on loans provided to employees is 4.80%

FBT Exemptions & Concessions

Where you have provided a Fringe Benefit to an employee the business may qualify for an exemption or concession which could result in there being no taxable value in relation to the benefit provided. Examples include:

  • Work related items such as tools of trade, protective clothing and electronic devices
  • The benefit provided is minor (less than $300 incl. GST) and infrequent
  • Accommodation and Food reductions in relation to Living Away From Home Allowances

Xmas Parties

One of the most common examples of when a business provides a Fringe Benefit to an employee is at a Xmas party. There are a number of factors which need to be considered to determine if the benefit provided will result in a taxable fringe benefit such as was the party held on the business’s premises or off premises and what was the cost of the benefit per employee.

If you are unsure whether or not your business has provided a Fringe Benefit to an employee please contact our office.