Latest updates to Australia’s Fringe Benefits Reporting

Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits provided to their employees or to their employees’ family or other associates.

FBT is separate to income tax. It's calculated on the taxable value of the fringe benefit.

As an employer, you must self-assess your FBT liability for the FBT year
(1 April to 31 March). If you have an FBT liability, you must file an FBT return and pay the FBT you owe.

You must file your return and pay the FBT you owe by 21 May, unless either:

• your tax agent files your return electronically – in this case, the due date is generally 25 June
  (you must be an FBT client of the tax agent by 21 May)
• the ATO accepts your request for an extension of time.

If you must pay FBT of $3,000 or more for the year, in the next year you must pay quarterly FBT instalments.

What is a fringe benefit?

A fringe benefit is like a payment to an employee, but in a different form to salary or wages.

There are different types of fringe benefits. Examples include:

• allowing an employee to use a work car for private purposes
• car parking
• paying an employee's gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by an employee, such as school fees
• giving an employee a discounted loan
• giving benefits under a salary sacrifice arrangement with an employee.

The following are not fringe benefits:

• salary and wages
• employer contributions to complying super funds
• shares or rights provided under approved employee share acquisition schemes
• employment termination payments (including, for example, the gift or sale at a discount of a company car to an employee on termination
•  payments deemed to be dividends under Division 7A
•  benefits provided to volunteers and contractors
• exempt benefits, such as certain benefits provided by religious institutions to their religious practitioners.

Calculation

To work out how much FBT to pay, you 'gross-up' the taxable value of the benefits you've provided. This is equivalent to the gross income your employees would have to earn, at the highest marginal tax rate (including the Medicare levy), to buy the benefits themselves.

The FBT you pay is 47% of this 'grossed-up' value of the fringe benefits.

As an employer, you can claim:

• an income tax deduction and GST credits for the cost of providing fringe benefits    
  • if you can claim GST credits, you claim the GST-exclusive amount as an income tax deduction
  • if you can't claim GST credits, you claim the full amount as an income tax deduction
• an income tax deduction for the FBT you are required to pay.

It is essential that employers understand their FBT reporting obligations and remain compliant with submissions and payments. Careful consideration should also be given to the level and types of benefits provided to Australian employees and the additional financial implications.

Crowe can help clients navigate both the benefit implementation and required reporting aspects and implications of FBT to ensure they remain compliant and ensure the whole process is the most tax efficient for the client. If you have any questions or need further assistance, please get in touch with Richard Austin or Azeem Zafar.