What are Your Fringe Benefits Tax Obligations

Where an employer provides a “fringe benefit” to an employee or their associate Fringe Benefits Tax may be imposed by the ATO on the employer.

Basically a Fringe benefit is a non cash benefit to an employee and the law classifies these into the following groups:

  • Car fringe benefit
  • Debt waiver fringe benefit
  • Loan fringe benefit
  • Expense payment fringe benefit
  • Housing fringe benefit
  • Living away from home allowance fringe benefit
  • Airline transport fringe benefit
  • Board fringe benefit
  • Entertainment
  • Tax-exempt body entertainment fringe benefit
  • Car parking fringe benefit
  • Property fringe benefit
  • Residual fringe benefit

 

Within each class are specific rules as to when the fringe benefit is applicable and how to calculate the value of the benefit.

Each employer needs to assess on the 31st March of each year whether a Fringe Benefit has been provided and the amount of Fringe Benefits Tax (FBT) payable thereon.

The FBT rates are able to be located at ATO FBT rates .

At Bentleys we have developed a systemised process for carrying out the following on an annual basis:

  • Assessing if a Fringe benefit has been provided
  • Calculating the value of the Fringe Benefit
  • Determining the best way of dealing with the benefit to minimise the tax effect.
  • Preparing the Fringe benefits Tax return
  • Preparing the required documentation to substantiate the calculation of the benefit and any exemptions applied for.

The existence of Fringe Benefits can also provide tax planning opportunities through salary packaging opportunities. Refer to the section thereon under Planning for Tax.