On 31 March 2017, the Fringe Benefits Tax (FBT) year ends. The ATO will review whether employers should pay FBT, as well as ensure you are paying the correct amount.
- Should I be registered for FBT?
- What information do I need to give my accountant?
- Are there any changes to the FBT rates come 1 April 2017?
- What is exempt from FBT?
- How can I reduce my FBT liability?
- Do I need to review our salary sacrifice agreements?
|1||FBT Rate changes On 1 April 2017, the FBT rates will decreaseto: FBT Rate 47% Type 1 Gross Up Rate 2.0802 Type 2 Gross Up Rate 1.8868|
|2||Should you be registered for FBT? Generally, if you provide employees, including directors,with cars, car parking, entertainment (food and drink), employee discounts, reimburse private expenses etc., then you are likely offering a fringe benefit and we will need to register your business for FBT. It’s important that you start gathering all of the details for 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 25 June 2017 with payment to be made by 28 May 2017.|
|3||What items are exempt from FBT? If you’re providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade, or minor and infrequent benefits that are less than $300 in value, you are unlikely to qualify for FBT. You can fill out our short FBT Questionnaire to be 100% sure!|
An easier way to manage your vehicle log books
For employers with 20 or more ‘tools of trade’ cars – a car required for the job, such as a sales rep travelling extensively for the business – the ATO has a new process for validating the business use percentage of the car.
It’s called the ‘simplified method’, and if you meet the access conditions, you can apply an average business use percentage to all ‘tools of trade’ cars in your fleet for first log book year and over the next 4 years. Conditions to be met include:
Is it time to review your salary packages?
With the FBT rate changes again on 1 April 2017, it’s a good time to review all existing agreements so that you and your employees know what the package will look like once the rate drops to 47%.
The lower rate will, in general, make salary packaging less expensive to provide and an opportunity to look for potential savings. For example, for employees earning above $180,000 there is a one-off opportunity between 1 April 2017 and 30 June 2017 to reduce their taxable income with the FBT rate drop covering the 2% debt levy imposed.
Be careful though not to drop the individual’s income below the debt levy threshold, and make sure:
New rules for meal entertainment benefits that are salary sacrificed
Where an employee agrees to receive meal entertainment benefits instead of future salary, i.e. as part of a salary sacrifice arrangement, concessions have been removed as of the 2017 FBT year. There are 3 key changes to note:
Ways you can reduce your FBT liability
Here are some ways you can reduce your FBT liability: