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Changes to Fringe Benefits Tax (FBT)

A reminder that another FBT year comes to a close on 31 March 2017.

There have been several minor changes in the FBT arena this year, the most notable include changes in the treatment of some electronic devices and meal entertainment for not-for-profit organisations.

Limit on Electronic Devices Lifted

Since 1 April 2016, employers of small business entities (turnover not over $2M) can provide their employees with multiple portable electronic devices, such as mobile phones, tablets, and laptops, without being subjected to FBT. However, take note that the “work-related use” requirement still applies.

Previously, the FBT exemption applied to only one work-related device (especially if they serve similar functions) per employee per FBT year.

Changes Affecting Not-For-Profit Organisations

Amendments to the FBT rules will have a big impact on not-for-profit (NFP) organisations.

From 1 April 2016, $5,000 cap has been introduced for salary-packaged meal entertainment, as well as entertainment facility expenses. Any amount exceeding the cap within a salary-packaged arrangement will count towards the general FBT exemption cap.

Also, note that employers can no longer use the 50/50 method and 12-week register method beginning the current FBT year. You must use specific reporting methods.

Are you providing Fringe Benefits?

Not sure if you’re providing Fringe Benefits to your employees? A reminder that you and your spouse may also be ‘employees’ for FBT purposes.

Have you recently purchased a vehicle that is available to an employee for their private use (remember, you are required to record odometer readings for all business vehicles on 31 March each year)?

Did you reward some team members with theatre tickets and dinner afterwards or a luxury weekend escape?

Our experience is that many employers unwittingly provide Fringe Benefits.

The Australian Taxation Office (ATO) established their FBT Taskforce a few years ago and advise they have undertaken numerous FBT audits in the small/medium business sector.  The ATO’s data matching capabilities are being increasingly more sophisticated making it easier for them to identify employers who are not complying with their FBT obligations.

Simply hoping an audit doesn’t happen isn’t the best policy.  We recommend you discuss your potential exposure and compliance obligations with us each year.

Our team is able to:

• assess your FBT risk;
• advise you of record keeping requirements including consequences of not keeping adequate records; and
• discuss the available methods of dealing with fringe benefits to give you the best outcome whilst ensuring you comply with the legislation.

If you need assistance in assessing your exposure to FBT, please contact us.

written by:

McKinley Plowman