top of page
  • Adrian De Vito - CPA

Fringe Benefits 2023

The Fringe Benefits Tax (FBT) year ends on 31 March. We’ve outlined the hot spots for employers and employees.


FBT updates and problem areas

  • FBT exemption for electric cars

  • Mismatched information for entertainment claimed as a deduction and what is reported for FBT purposes

  • Not lodging FBT returns

  • Travelling or living away from home

Important FBT issues

FBT exemption for electric cars

Electric cars represent a small but growing proportion of the new car market in Australia. To encourage Australians to make the shift, the Government has passed legislation that provides an FBT exemption for certain no or low emissions vehicles from 1 July 2022.

This means that providing your team members with the use of electric cars, hydrogen fuel cell electric cars or plug-in hybrid electric cars can now potentially qualify for an FBT exemption. The FBT exemption should normally apply where:

  • The value of the car is below the luxury car tax threshold for fuel efficient vehicles ($84,916 for the 2022-23 financial year); and

  • The car is both first held and used on or after 1 July 2022.

If your business provides these benefits to employees your business will still need to work out the taxable value of the car benefit as if the FBT exemption didn’t apply. This is because the value of this exempt car benefit is still taken into account in the reportable fringe benefits amount of the employee. While income tax is not paid on this amount, it can impact the employee in a range of areas (such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments).

Mismatched information for entertainment claimed as a deduction and what is reported for FBT purposes

One of the easiest ways for the ATO to pick up on problem areas is where there are mismatches.

When it comes to entertainment, employers are keen to claim a deduction but this is not recognised as a fringe benefit provided to employees.

Expenses related to entertainment such as a meal in a restaurant are generally not deductible and no GST credits can be claimed unless the expenses are subject to FBT.

Not lodging FBT returns

The ATO is concerned that some employers are not lodging FBT returns or lodging them late to avoid paying tax. The ATO will normally pay close attention to any employer that:

  • Is registered for FBT but lodges late. If your business is likely to face delays in lodging the FBT return, it’s usually a good idea to get in touch with the ATO early and ask for an extension request; or

  • Is not registered for FBT. If your business employs staff (even closely held staff such as family members), and is not registered for FBT, it’s essential you have reviewed your position and are certain that you do not have an FBT liability. If the business provides cars, car spaces, reimburses private (not business) expenses, provides entertainment (food and drink), employee discounts etc., then you are likely to be providing a fringe benefit. Make sure you have reviewed the FBT client questionnaire we sent you!

Travelling or living away from home

The ATO have recently finalised their guidance on travel costs and will be looking closely at transport, meal and accommodation benefits.

Travel allowances often cause confusion for many businesses. If your business provides travel allowances to employees, you will normally need to consider whether they are living away from home or just travelling overnight in the course of work.

Where your employees are travelling overnight in the course of work, these travel allowances are normally assessable to your employees. However, they might be entitled to personally claim deductions for some of their travel expenses.

For workers that are living away from home, these allowances are dealt with instead through the FBT system as a fringe benefit. While the taxable value of the benefit is usually the amount paid, there are some generous concessions that can allow for some or all of the allowance to be FBT exempt if certain conditions are met.

As a result, getting the distinction right between travelling overnight for work or living away from home is important.

The ATO explains in TR 2021/4 when allowances should be classified as a travel allowance or a living away from home allowance. Helpfully, the ATO has also finalised a ‘safe harbour’ style approach in PCG 2021/3 which can be used specifically for this purpose.

FBT is an area of tax legislation that quite often disregarded by business owners.


If you have any further questions or require more information about FBT, please do not hesitate to contact Adrian De Vito and the team at Clear Accounting Solutions. As your trusted provider of accounting and taxation services, we are committed to helping our clients navigate the complexities of taxation law and compliance obligations.


Contact us today for expert advice and support.


Adrian De Vito - CPA

Principal

Clear Accounting Solutions


Please note that the information provided is intended to provide a general overview and should not be considered as professional advice. We strive to maintain the accuracy of the information provided; however, due to the constant evolution of legislation, policies, regulations, and other factors, the information may become outdated. Therefore, individuals should not rely on this information to make financial, investment, or legal decisions.

21 views0 comments

ความคิดเห็น


bottom of page