Fringe Benefits Tax (FBT) is required to be paid by employers who provide non-cash benefits to their staff. Accurate reporting of FBT is something that is consistently on the ATO’s compliance program.
FBT is calculated on the taxable value of the benefits that have been provided to employees. Types of benefits employers must pay FBT on include vehicles for private use, discounted loans with a low or no rate of interest, paying an employee’s membership to a gym and entertainment perks such as free tickets to concerts and providing food and drink, accommodation or travel in connection with the entertainment.
The ATO is focusing on occasions where taxpayers avoid or delay payment of tax by non-lodgment of their FBT return. They are specifically looking into areas of FBT that include:
- Failing to report motor vehicle benefits, incorrectly applying exemptions for vehicles or incorrectly claiming reductions for these benefits.
- Discrepancies between an amount reported as an employee contribution on FBT returns compared to the income amounts on an employer’s tax return.
- Claiming entertainment expenses as a deduction but not correctly reporting them as a benefit or incorrectly classifying entertainment expenses as sponsorship or advertising.
- Incorrectly calculating car parking benefits by significantly discounting market valuations, using noncommercial parking rates or not supporting with adequate evidence.
- Not reporting on business assets provided for personal enjoyment of employees or their associates.
- Not lodging FBT returns or lodging them late, in an effort to delay or avoid payment of tax.
There are also a number of employee benefits that are exempt from FBT and cannot be included on FBT returns to the ATO. These can be because the benefits are primarily used by workers during employment or they are significantly similar to another item already being claimed. These exemptions can include work-related items such as portable electronic devices (mobile phones, laptops, etc.), computer software, protective clothing, briefcases and trade tools. Businesses will need to assess their own tax liability within each FBT year, from 1 April to 31 March. Returns must be lodged before the due date on 21 May.