Most companies and businesses provide their employees with other benefits aside from their salaries and wages. Employee perks such as cars, gym memberships, entertainment, payment of private expenses, etc. are all fringe benefits. And these are subject to fringe benefits tax (FBT), which has a rate of 47%.
The FBT year runs from 1 April to 31 March. With the end of the FBT year approaching quickly, now’s the time to start assessing your FBT liabilities.
Lodging your FBT return
You are obligated to lodge an FBT return if you offer your employees benefits, aside from their wages, that result in an FBT liability. Although there are some benefits that are exempt from FBT such as minor benefits that cost below $300, or devices or vehicles that are necessary for employees to perform their jobs (and are hardly used for personal use).
Generally, the deadline for lodging and payment of FBT is 25 June if done electronically via the practitioner lodgment service (PLS) or 21 May if lodged by paper, whether you do it yourself or through your tax agent. But since the due dates for this year fall on a Saturday, the deadline is moved to the next business day, which is 27 June and 23 May, respectively.
Reducing your FBT liability
Employers can claim an income tax deduction for the cost of the benefits provided and the FBT they pay. You may reduce your FBT liability by:
- Providing cash salary instead of fringe benefits
- Providing benefits that are income tax-deductible
- Providing benefits that are exempt from FBT
- Using employee contributions
Remember, settling your FBT liability is part of your obligations. If you need help in lodging and preparing your FBT return, reach out to the Elements Advisory Group tax team to assist you.