Fringe benefits are an important part of business and can be a useful way of attracting quality staff. However, if you’re going to provide fringe benefits to your staff, you need to be aware of your taxation obligations.
Fringe Benefits Tax (FBT) can be difficult to understand, particularly when the government constantly makes changes to legislation. The experienced staff at Jigsaw Tax and Advisory can assist with all your FBT needs.
Here are five key changes to FBT which will take effect from 2018 year onwards:
Increased tax rates – The FBT rate rose from 47 to 49 per cent in the FBT years ending in 2016 and 2017. The rate will nowdrop back to 47 per cent in the 2018 year.
Not-for-profit changes – There is now a $5,000 cap on top of the existing exemption caps for salary-packaged meal entertainment and entertainment facility leasing expenses for certain employees. These new caps require expenses to be reported in the FBT for this year.
New standards (entertainment) – Employers are now required to use a specific reporting method when submitting tax returns. The ‘concessional valuation rules ’ have been changed. For the current FBT year, employers can’t use the 50-50 split method or the 12-week register methods for valuing salary-packaged entertainment.
No tax for devices – Small businesses can now avoid incurring a FBT liability if they provide employees with multiple portable electronic devices that have substantially similar functions. This is particularly relevant for businesses that may need to provide employees with devices such as laptops, tablets, mobile phones and GPS’s. Previously, small business employers were subject to FBT if they provided two devices that had significantly identical function, e.g. smartphones can perform similar or identical functions to laptops and tablets. As long as the multiple devices are primarily used for work, businesses will not have to claim them on FBT for the first time this year.
Three-year reporting requirements – The amendment period for a FBT return is three years, however, the ATO can extend that period if it deems it necessary, particularly if it believes an entity is involved in fraud or tax evasion. From this year onwards, employers who receive employee contributions that offset FBT must be registered and begin lodging FBT returns showing the contributions made by the employees. This means businesses need to ensure records are kept for an appropriate amount of time.