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Fringe Benefits Tax (FBT) - Are you organised ?

It’s time to start thinking about what strategy is to be employed around FBT. FBT is calculated from April 1st to March 31st each year. For the 2018 period the FBT tax rate is 47%.

What is FBT !

FBT is a tax paid on certain benefits employers provide to their employees or their employees’ associates (typically family members) in addition to, or in place of, salary or wages.

For example, you provide a fringe benefit when you:

  • Allow your employee to use a work car for private purposes.

  • Give your employee a cheap loan or access to a corporate box.

  • Reimburse an expense incurred by your employee, such as school fees.

  • Provide entertainment by way of food, drink or recreation.

FBT is separate from income tax and is based on the taxable value of the various fringe benefits provided.

When is it due !

If you are doing this process internally (by yourself or using a staff member) lodgement and payment is due on the 21st of May. If lodging through a tax agent, electronic lodgement is due by June the 25th. Payment in both cases is still due by the 28th of May 2018.

What we recommend you do !

We generally don’t recommend that you be registered for FBT as the 47% tax rate generally exceeds other less costly options.

Choosing to remove the FBT liability can be as simple as not claiming GST and a tax deduction on these items, and business owners making personal contributions to negate the cost to the business.

Sounds simple ? Well not really, ensuring you can identify what is a fringe benefit can be complicated. This is the hard part.

Also, small business have access to some great FBT exemptions that you want to claim as a tax deduction. For example, offering car parking to employees if turnover is less than $10m.

Our process with FBT is simple and is summarised as follows:

  1. We use CPA qualified staff to manage your bookkeeping and apply the correct treatment around FBT items to remove the need to register and lodge FBT returns.

  2. We setup receipt bank and integrate this with your Xero accounting software to ensure every transaction is substantiated and tax treatment is correct.

  3. We utilise methods around owners contributions each quarter when preparing BAS returns to ensure compliance is maintained and FBT liability is removed.

Currently we are running a "Receipt Bank" promotion for $25 per month for unlimited transactions and users. Offer closes 25th of May 2018, get in quick.

If you are unsure about FBT and would like to discuss further please let us know. Also if you would like an FBT review of your business, please book an appointment below and we can organise a time to perform an assessment.

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