Fringe benefits tax (FBT) is tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates.
If you are an employer and have employees, you may need to lodge a Fringe Benefits Tax (FBT) return.
The Fringe benefits tax year ends on 31 March 2023.
To help you meet your FBT obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:
- Should I be registered for FBT?
- Should I lodge a FBT Return even if no FBT is payable?
- Key things you MUST do on 31 March 2023
SHOULD YOU BE REGISTERED FOR FBT?
Generally, if you have employees (including Directors) and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT. There are 13 defined Fringe Benefit categories in the FBT law.
It’s important you start gathering all the details of these provided benefits as soon as possible using our annual FBT Questionnaire, so we can calculate any potential FBT liability and lodge your FBT return on time – due 27 June 2023 with payment to be made by 27 June 2023.
If you are unsure if you should be registered for FBT, have a look at the questionnaire below:
If you ticked one or more of these questions then we will need to calculate any potential FBT liability, or to minimise it.
Please take the time to complete this checklist as it is a very important part of the FBT process. It helps you:
- Identify and provide the information we need to prepare your Fringe Benefits Tax Return
- Minimise the queries from us during the preparation of your Fringe Benefits Tax Return
- Ensure we can complete your Fringe Benefits Tax Return by the due date of 27 June 2023
SHOULD YOU LODGE AN FBT RETURN EVEN IF NO FBT IS PAYABLE?
Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway?
Our strong recommendation to you is yes, you should lodge an FBT Return if you provide benefits to employees, even if no FBT is payable.
This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you FBT and penalties.
KEY THINGS YOU MUST DO ON 31 MARCH 2023
Whilst we strongly recommend that you register for FBT and if applicable lodge a Nil FBT Return, if you decide not to there is still key information that we need you to record as at 31 March 2023. We will then rely on this when we complete your 2023 annual Financial Statements. Here’s a summary of what you need to do:
- On Thursday 31 March 2023, when the employees have finished their travel for the day request your team each take a photo of their vehicle odometer readings using their phones and email it the photo to you, or to a nominated person in your business to collate them all for you. Having these vehicle odometer readings for all business vehicles is vital to us being able if your FBT can be reduced by using the ‘operating cost’ method instead of the ‘statutory formula’ method
- Carefully manage the private use of business cars, including the travel between home and work. The ATO is conducting a data matching program aimed at motor vehicles to capture benefits that aren’t currently being reported through FBT. If significant variances are identified a full ATO audit may follow.
- Review all meal entertainment expenses provided to employees, associates and clients and prepare a register that outlines the following for every event:
- The total cost (GST inclusive)
- How many employees were present and their names
- How many employees’ associates were present and their names
- How many clients were present (names not needed)
- The nature of the event (dinner, lunch, coffee, drinks, etc.)
The FBT year ends on 31 March 2023, so be sure to complete and return the attached FBT Questionnaire to our office as soon as possible so you don’t miss the lodgement date of 27 June 2023 and meet the payment due date of 27 June 2023.
We will review these documents and then provide you with an upfront price for our services before we begin any work.
We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability or creating effective salary sacrifice arrangements.
The Team at Knox Taxation