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.
