Navigating Fringe Benefits Tax (FBT): Essential Preparation

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Understanding Fringe Benefits Tax (FBT) is non-negotiable for business owners.

With the FBT year-end fast approaching on 31 March, timely preparation is becoming more crucial. The following is an overview of the essentials to help you navigate FBT seamlessly.

Fringe Benefits Tax is a tax applied to most non-cash benefits provided by an employer to their employees. These are benefits given to employees or their associates in place of salary or wages.

Common FBT Categories

Motor Vehicle Fringe Benefits

A Motor Vehicle Fringe Benefit occurs when an employer makes a car available for the private use of an employee, including for commuting to and from home or personal errands.

Meal Entertainment Fringe Benefits

Meal Entertainment Fringe Benefits are the provision of food and drink by an employer to an employee, typically during business-related events or gatherings.

Common examples include meals provided at office parties or work functions, entertaining clients over lunch or dinner, and box seats with food and drink at the footy.

Expense Payment Fringe Benefits

Expense Payment Fringe Benefits are when an employer reimburses an employee for private expenses.

Common examples include private travel, health insurance and VISA costs.

Record-Keeping Requirements

Thorough documentation is paramount across all FBT categories. The most common items include logbooks, employee declarations, and odometer records.

Common FBT Exemptions

While understanding taxable benefits is essential, being aware of potential exemptions can create opportunities to provide staff with additional benefits at minimal cost.

Electric Vehicles

Electric vehicles valued up to the luxury car tax threshold ($91,387 in FY 2024/25) are exempt from FBT. There are some minor record keeping requirements, but there is no need for these to be used primarily for work related purposes to take advantage of the exemption.

Work-Related Devices

Certain work-related items provided to employees are exempt from FBT. These include laptops, tablets, mobile phones, and protective equipment, as long as the primary use is for work-related purposes.

Minor Benefits

These are benefits valued under $300, provided infrequently and irregularly. Examples include staff parties, gifts during festive seasons, or recognition awards.

Not-For-Profit Entities

Not-for-profit entities enjoy specific FBT exemptions. These organisations can provide certain fringe benefits to employees without having to pay FBT. This provision recognises the vital contributions of not-for-profits and ensures they can continue their important work with minimal financial strain.

Retraining and Reskilling

Benefits provided to employees for the purpose of retraining or reskilling are exempt from FBT. This is particularly relevant for training programs or courses aimed at equipping employees with new skills.

Due Dates

Your FBT return needs to be lodged and paid by the 25^th June each year.

As the end of the FBT year approaches, proactive preparation can translate into real advantages for your business. Understanding FBT’s relevance can lead to better financial outcomes and provide additional benefits to employees at minimal additional cost.

Need personalised advice navigating through your FBT obligations? Reach out to the team at Elevate Accounting today here or call 08 9460 1040. We’re here to integrate seamlessly into your business and provide real-time, strategic support.