A fringe benefit is any benefit you provide to an employee, or to the associate of an employee (such as their spouse or children) in addition to their salary or wages. Some of these items could include.
• Allowing an employee to use a work car for private purposes
• Providing employees with cheap loans
• Releasing an employee from an owed debt
• Reimbursing an expense incurred, such as school fees
• Providing accommodation
• Providing living-away-from-home allowances.
• Providing entertainment by the way of food, drink or recreation
• Providing salary package arrangement, or
• Providing goods at a lower price than they are normally sold to the public.
As an employer, if you have provided any of the above items to your employees in relation to their employment, as well as others, then you could be liable for Fringe Benefits Tax.
The Fringe Benefits Tax (FBT) year ends on 31 March each year and payment of any necessary FBT is due by 21 May. Eligible benefits that are paid must be recorded on employees’ payment summaries for the income year ending 30 June of the same year.
As a business owner, it is your responsibility to determine whether you have provided fringe benefits to your employees during the course of the FBT year, and consequently, whether you are liable to pay FBT on those benefits. If an employee is receiving certain fringe benefits of greater total taxable value than $2,000 in an FBT year, you must report the total taxable value to the Australian Tax Office.
If you have provided any of the above items to your employees since 1 April 2010 you may be liable for the payment of FBT, so it is necessary to consider this before the end of the FBT year. It is also important to note that the cost you incur in providing fringe benefits to your employees is generally an allowable income tax deduction, though this should always be discussed with your accountant or financial consultant.
If you have any questions or would like further advice in relation to your business’ FBT liabilities contact The Quinn Group on 1300 QUINNS or submit an online enquiry.