The Crowe Tax Advisory team have more than 30 years’ experience helping business owners manage their Fringe Benefits Tax (FBT) risks and identify FBT opportunities.
To help you prepare your 2021 FBT return, our team have developed a handy checklist that can be used as a general guide to identify the most common forms of fringe benefits.
We’ve also prepared some examples that illustrate how the FBT team has worked with our clients to assist them fulfil their FBT obligations and advise them on tax effective FBT solutions.
The client had previously sourced their own rates to apply the lowest car parking rates in their business’ FBT return to calculate car parking fringe benefits.
At no charge to the client, our team reviewed the rates applied using our external car parking consultant. It was determined the client could apply lower daily rates than the rates applied in the original FBT returns.
We were able to lodge amended FBT returns for prior FBT years using the lowest daily rates identified to enable the client to claim a substantial FBT refund.
Instead of sourcing your own car parking rates, using the services of a specialist FBT adviser can help identify the lowest daily rates to ensure you are paying the minimal amount of FBT.
If you have sourced your own car parking rates in previous FBT years, we can review the rates used in your FBT returns to ascertain whether you have applied the lowest car parking rates. If we can identify a lower rate, our team can assist you in claiming an FBT refund.
Using the Average Rate Method to calculate FBT for our client, we were able to identify an optimal method that resulted in a reduction of approximately $300,000 in their FBT payable using the previous FBT return as a benchmark.
The Average Rate Method is a simplified record keeping approach that provides employers with the option to use an average rate business use percentage to calculate FBT relating to fleet cars in certain circumstances.
The Average Rate Method can only be used in certain circumstances such as:
The average business use percentage may be applied for up to three subsequent FBT years unless there have been substantial changes in the use of these cars during this period.
If you meet the requirements, the Average Rate Method using an average rate business use percentage could provide significant cost savings for both FBT payable and the time and resources required to be invested in log sheet compilation and analysis.
The client had previously determined that several of its employees should be treated as LAFH for FBT purposes. The client paid FBT on the LAFH fringe benefits provided.
Following a review by the FBT team, it was determined these employees should have been classified as traveling for business purposes rather than LAFH. As such, there was no requirement to pay FBT as FBT is not payable on travel allowances.
Further, as the allowance was paid within the ATO prescribed rates, the allowance was not subject to income tax in the hands of the employee (i.e. no additional on-costs for the client).
If you have employees working away from home for a period of time, it is important to get the distinction between LAFH and business travel correct as the tax position is different depending upon the correct classification.
Our FBT team can review your position to ascertain whether the employee is travelling for business purposes or LAFH.
Employees working under an Award or Enterprise bargaining agreement may be provided with an allowance which is called a LAFH allowance. However, for FBT purposes, the allowance does not satisfy the conditions of a LAFH allowance but should be treated as a travel allowance.
Join me at 1pm AEDT on Tuesday 23 March 2021 for a one-hour webinar where we will discuss the current COVID-19 landscape and how it directly affects your business.
During the webinar, we will provide an update of the latest developments and discuss the implications of COVID-19 measures on the 2021 year-end process and look at many more considerations in the ‘Year End Issues’.