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Fringe Benefits Tax – What you need to know

Mar 14, 2018 | Accounting, Business, Fringe Benefits Tax, Taxation

The Backyard BBQ Advice :- ”Mate, the ATO don’t care about fringe benefits tax so you don’t have to either, what ya gotta do is BLAH BLAH BLAH”

You’re certain to hear a lot of different advice. A few simple steps upfront can start you down the path toward success.

Talk to DGL staff who have been there done that.

  • Fringe benefits tax (FBT) is basically something that you, the Boss (substitute:- your business) may pay for. This benefit will be in addition to, or part of, your employees salary or wages package. FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided.

March 31 and the end of the FBT year is around the corner, so to help taxpayers get things right, the ATO has made public the fringe benefits tax issues that attract its attention.

The ATO have indicated the following behaviours and characteristics may wave that red flag in front of the raging FBT bull:

  • tax or economic performance not comparable to similar businesses
  • low transparency of tax affairs
  • large, one-off or unusual transactions, including transfer or shifting of wealth
  • tax outcomes inconsistent with the intent of tax law
  • lifestyle not supported by after-tax income
  • accessing business assets for tax-free private use
  • poor governance and risk-management systems.

The areas the ATO has stated it will be focusing on with regard to FBT are listed below. If you think you are caught up in some of these give DGL a call

  • Living-away-from-home allowance (LAFHA)
    LAFHA is an allowance an employer pays to employees to compensate for additional expenses incurred and any disadvantages suffered because the employee’s duties of employment require them to live away from their normal residence.
  • Car parking valuations – even in Mackay
  • Provided motor vehicles
    Another area of focus will be on situations where an employer-provided motor vehicle is used, or available, for private travel of employees. There are circumstances where this may be exempt.
  • Employee contributions
    A red flag is also raised in situations where employee contributions that have been paid by an employee to an employer (which reduces the FBT liability of the employer, such as where a car is supplied but the employee contributes to its maintenance).

The ATO has found that some employers fail to identify or report these fringe benefits or incorrectly apply exemption provisions.

The FBT season is coming to an end, if you are not sure, make sure any concerns are raised with DGL in plenty of time.

There are special rules around some of these circumstances, don’t get caught out, ask DGL for more details.