FBT 2016: 5 Things Every Business Should Know

How do I know if I need to pay FBT? What is exempt from FBT? And what to be aware of come 1 April 2016. 

      

The FBT rate increased from 47% to 49% from 1 April 2016. Employers need to take this new rate into account with current or new salary packages with employees.

How do I know if I need to pay FBT?

Fringe Benefits Tax (FBT) is a tax payable by an employer in respect of various benefits provided to employees. If you are not sure whether your business is providing fringe benefits to its employees, here are some key questions you should ask yourself:

·         Does your business make vehicles owned or leased by the business available to employees for private use?

·         Does your business provide loans at reduced interest rates to employees?

·         Has your business forgiven or released any debts owed by 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?

·         Does your business provide entertainment by way of food, drink or recreation to employees?

·         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?

Shortly, we’ll be sending out our annual FBT Questionnaire to all our business clients to help you further in identifying if you have a FBT liability.

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 that are provided primarily for use in the employee’s employment – further information below

·         An item of computer software;

·         Protective clothing required for the employee’s job;

·         A briefcase;

·         A calculator;

·         A tool of trade.

Two laptops are better than for small business

If you are small business with a turnover under $2M, your business can offer employees more than one work-related portable electronic device, such as mobile phone, laptop and tablet and not have to pay FBT on it even if the device is the same or similar to others already provided in that same FBT year. All other businesses are limited to one device that is identical or similar to another for each employee per FBT year.

Is Salary Sacrificing worth it?

Now is a good time to review any salary sacrifice agreements to ensure they will still achieve their intended goals and not create an administrative burden for little to no benefit with the FBT rate continuing at 49% for another year.  For employees earning above $180k however, the difference in timing between the FBT year and the income year creates a unique planning opportunity between 1 April 2017, when the FBT rate reduces back to 47%, and 30 June 2017 when the 2% debt tax is removed.

Travelling or living away from home – what’s the difference?

The ATO will be looking closely at Australian taxpayers claiming living away from home (LAFH) allowances to make sure they are not accessing FBT concessions incorrectly.  So what is the difference between travelling or living away from home?

If someone is living in say Sydney but are heading to Melbourne on ad hoc trips every other week, they are probably just travelling and would only be entitled to travel deductions, not FBT concessions that apply to LAFHA’s. If that person however sets up a home temporarily in Melbourne and keeps their home in Sydney for their use (unrented), then it’s more likely they can access the living away from home allowance concessions.

Care also needs to be taken where transport is provided to fly-in-fly out workers as special rules apply and it’s important to ensure the travel is exempt from FBT.

Motor Vehicles

Do you have any motor vehicles owned or leased by the business that is used by an employee for private purposes, including the travel between home and work? If you do, then we encourage you to manage the FBT in these instances carefully and closely as the ATO is conducting a data matching program that is aimed at motor vehicles to try and capture benefits that are not currently being reported through FBT.

How we can help you

If you’re not sure if your business has a FBT liability or not, that’s ok. Shortly, we’ll be sending out our annual FBT Questionnaire to all our business clients to help you further in identifying if you have a FBT liability, and provide us with all the information we need to prepare and lodge any FBT returns required. 

The current FBT year ends on 31 March, so be sure to complete and return the questionnaire as soon as possible so as to not miss the lodgement date of 25 June. 

SuperStream Deadline Approaching!

The new way of processing Superannuation Payments is almost here.

      

In its bid to streamline the processing of transaction for superannuation funds, the ATO has introduced SuperStream. The main aim of SuperStream is to ensure employer superannuation contributions are paid in a consistent, timely and efficient manner.

The key component of SuperStream is that it is compulsory to make your superannuation contributions online with products that are SuperStream compliant. The easiest way to become SuperStream compliant is to use software in your business that enables electronic super payments.

When does my business need to become SuperStream compliant?

If you are running a business with 19 or less employees, you have until 30 June 2016 to be making your employer superannuation contributions electronically. If your business has 20 or more employees your cut-off date was 1 November 2015 so you will need to start making these electronic payments ASAP!

How we can help you

If you’re not sure if your business is SuperStream compliant let us know and we can do an assessment for you. We can also help you implement Xero or MYOB, online accounting software, into your business so you can easily make SuperStream compliant superannuation payments for your employees.

Give your Super a Boost!

An alternative way of building up your retirement savings.

        

While most of us will hopefully accumulate enough superannuation throughout our working lives to have a comfortable retirement, many of us simply won’t have the funds there to splurge on something nice every now and then.  

What if we could tell you there's a way to boost your superannuation earnings that reduces the amount of tax you have to pay on your contributions at the same time - would you be interested?

Who wouldn't!

As one option to consider, by purchasing an investment property within a Self-Managed Superannuation Fund (SMSF), you can use the power of leverage to boost the growth of your retirement savings. The interest on the loan is 100% tax deductible which means not only will you be making more money; you'll be saving tax at the same time!

The other benefit of investing in property through your SMSF is diversification. Some people are tired of the share market going up and down like a yo-yo and prefer property as an investment. Investing in property in addition to shares will mean you won't have all your eggs in one basket. This gives you peace of mind knowing a sharp downturn in shares one day won't be the end of your retirement savings.

Sounds good? Absolutely, but it isn’t something you should rush into without discussing your situation with your Accountant or Wealth Advisor first. Investing in property through an SMSF can be complex and you will need to be confident in your numbers before you get started.

We’re here to help you!

Make an appointment with us today to discuss your situation and see if property within an SMSF is right for you.