You may be wondering..... What is the go with all the emoji's above? You may also be thinking FBT (Fringe Benefits Tax) doesn't apply to me. Well, sorry to be the bearer of bad news, but nearly all small businesses need to deal with FBT. AND on top of this FBT is again one of the ATO focus areas for 2025.
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 💰
- giving 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 prepare the calculations, 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 Monday (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 as well as matching registrations of vehicles, it's super simple for the ATO to work out who is and who isn't compliant.
(hint, you don't want to be on the non-compliant list!)
FBT exemption for electric cars
We’ve been asked a lot of late about purchasing electric cars for employees and whether there are any benefits to this.
In short, if a car :
- Is an electric car, hydrogen fuel cell electric car or plug-in hybrid electric car, and
- The value of the car is below the luxury car tax threshold ($89,332 this year), and
- The car is purchased (and used for the 1st time) after 1 July 2022
The car will be exempt from FBT.
Despite this, the calculations and declarations still need to be completed for electric vehicles.
OK. What do I have to do?
This is where the good news comes in!
Tuesday 1st April we will send a checklist to you via email for you to complete. This is time sensitive as we need Odometer Readings as of 31st March if you pay for any vehicle 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.
