If your business provided any Fringe Benefits during the year ending 31 March 2008, you will need to lodge a Fringe Benefits Tax (FBT) Return before 21 May 2008. This includes fringe benefits provided to you; a relative; an employee or director; and relatives of employees or directors (known as ‘associates’).

Fringe benefits tax (FBT) is a tax paid by employers on the value of certain benefits that have been provided to their employees or employees’ associates in relation to their employment.

A ‘benefit’ is any right, privilege, service or facility. Some benefits are explicitly excluded as fringe benefits and therefore are not liable to any FBT. The main exclusions include: salary and wages; most contributions to superannuation funds; payments from certain superannuation funds; employee share schemes benefits; termination of employment payments; capital payments for enforceable contracts in restraint of trade and for personal injury; payments deemed to be dividends for income tax purposes and amounts that have been subject to family trust distribution tax.

Where the value of the benefits provided to an individual employee exceeds $2,000, employers need to record the total taxable value of certain fringe benefits provided during the FBT year ending 31 March on the employee’s payment summary (or group certificate) for the income year ending 30 June. Special rules apply if the employer is exempt from FBT.

Employees who have these benefits, known as the ‘reportable fringe benefits amount’, reported on their group certificates will not be directly liable for additional income tax, but the reported amount is used to establish whether a taxpayer is liable to pay income-tested surcharges, such as the Medicare levy surcharge, or is entitled to receive any income-tested tax concessions, for items including personal and spouse superannuation contributions. Where related parties, for example a husband and wife, have both had use of a fringe benefit, care needs to be exercised in determining to whom the fringe benefit should be allocated.

Some ‘excluded fringe benefits’ that are not included in the reporting requirements are: car parking; benefits linked to entertainment facility leasing expenses and entertainment by way of food, drink, accommodation, travel or other expenses in relation to that entertainment.