Now whilst most Small Businesses don't end up having to pay FBT to the ATO, almost every Small Business is caught providing a 'Fringe Benefit' to employees (including yourselves) and therefore has to ensure they have the appropriate declarations etc to ensure they don't end up with a large bill.
What is FBT
If you provide your employees with a benefit other than Salary/Wages/Bonuses/Super, you are likely to be providing Fringe Benefits to your employees. These 'benefits' include :
- providing a car 🚗
- providing a mobile phone 📱
- providing computers 💻 🖥
- having a work xmas party 🎉
- providing things like a corporate box at a sporting event? ⚽️ 🐎
- providing employees with lunch / dinner / alcohol (like Friday afternoon drinks) 🥗 🍔🍕 🍻 🍸
- providing employees with car parking 🏢
- providing employees with loans 💰
- give gifts to your employees 🎁
Basically if you provide any of the above then you are likely to be providing Fringe Benefits to your employees. While there are some exemptions and thresholds before you have to pay tax on these benefits, you are still required to lodge the return and keep the records. Don't stress though! We will take care of the return and the lovely paperwork.....but we do need you to action our request.
Why now?
This year the FBT year ends on Friday (31st March). Yes, that's right it's a completely different year for fringe benefits tax than it is for your normal income tax.
The ATO are cracking down on non-compliance of FBT obligations so this isn't something you can ignore and put in the too hard basket. With data matching from your business tax returns it's super simple for the ATO work work out who is and who isn't compliant.
(hint, you don't want to be on the non-compliant list!)
One of the hot topics is the FBT exemption for electric cars, which has been introduced to encourage Australians to switch to low or no emissions vehicles. If the car value is below the luxury car tax threshold for fuel efficient vehicles ($84,916 for the 2022-23 financial year) and is first held and used on or after 1 July 2022, it can potentially qualify for an FBT exemption. However, businesses still need to calculate the taxable value of the car benefit for the reportable fringe benefits amount of the employee, ie you still need to complete the paperwork.
OK. What do I have to do?
This is where the good news comes in!
We've sent a nice little checklist for completion to all of our clients. This is time sensitive as we need Odometer Readings as of 31st March for anyone who pays for any car expenses in your business. Now don't stress this doesn't mean you have to pay tax. But we do need the information on file and we do have to prepare the necessary paperwork. This is the case even if you drive a Ute that is exempt from FBT. The paperwork still needs to be in order!
We also need to complete a few declarations for Mobile Telephones. So we need to know the names of anyone you pay a mobile phone bill for (all on the questionnaire). Most of the other information we obtain from Xero and just need you to sign a bunch of declarations at the end.
Easy peasy. So 1st step, complete the checklist. Then look out for your Declarations that will be sent to you for signature once your returns are completed over the next few weeks.