We are aware that FBT is one of the less appreciated taxes, with little more than nuisance value for many of our clients – but legislation is something that must be complied with. As always, we endeavour to making this process as smooth as possible for our clients.
Fringe Benefits Tax Rate
For the 2018 FBT the ATO have reduced the FBT tax rate down from 49% to 47%, this is to realign the tax rate with the top individual marginal tax rate.
Reportable Fringe Benefits
If you provide certain fringe benefits with a total taxable value of more than $2,000 in the FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee’s payment summary for the corresponding income year.
Please note that the FBT gross up rates are:
- Type 1 Benefits – 2.0802
- Type 2 Benefits – 1.8868
Should you require additional fringe benefits tax forms, they are listed below (click to download):
- Form 1 – Blank copy of the Fringe Benefits Questionnaire.
- Form 2 – Entertainment and Recreation Expenses Schedule.
- Form 3 – Form for Vehicles Held at 31 March 2018 or sold during the year(include odometer readings, logbook percentage and operating costs if necessary).
- Form 4 – Form for vehicles purchased after 1 April 2017 (include details of both the cost of the vehicle or the sale of the vehicle and the necessary declarations for both the operating and statutory method).
- Form 5 – Logbook Checklist.
- Form 6 – Expenses Payments Schedule.
Loan Fringe Benefits
A Loan benefit arises when a loan is made to an employee (or associate), either without interest or at a rate lower than the benchmark statutory rate (currently 5.25% p.a. for the year ended 31 March 2018, was 5.65% p.a. in 2017, 5.65% in 2016).
Expense Payment Benefits
The general rule is that private expenses paid for, or reimbursed, on behalf of employees or their families are treated as expense benefits and subject to FBT. Typical example includes the payment or reimbursement of mortgage payments, school fees and holiday expenses.
Car Parking Benefits
Broadly speaking, a car parking benefit arises when an employer provides parking for employees, for more than 4 hrs between 7 am and 7 pm, in a commercial car park which charges more than $8.66 per day (2017 – $8.48).
(If your business turnover exceeds $10 million for the year, this test is extended to any car park owned or leased by the business, such as in the basement of the business premises).
Minor Benefits are exempt from FBT if they are provided infrequently and irregularly to employees (or associates), and the value of the benefit is less than $300 (GST inclusive). However, no GST is claimable nor is it tax deductible but the exemption might be more beneficial.
The most common situation where this exemption is applied is in relation to the staff Christmas party. However, please note that an employer is not entitled to use the minor benefit exemption if an election has been made to use the 50/50 split method to calculate FBT liability for meal entertainment benefits.
Meal Entertainment Benefits
Meal entertainment benefits arise where the provision of food or drink has the character of entertainment. The general rules are as follows:
- Food or drink provided in a social situation will have the character of meal entertainment as opposed to being provided for refreshment or sustenance. If provided during work time or overtime the less likely it has the character of meal entertainment.
- The more elaborate the meal, the greater the likelihood it has the characteristics of meal entertainment. Food or drink provided outside the employer’s premises is more likely to have the characteristics of meal entertainment (e.g. restaurant, cafe or function room).
The following checklists (extracted from the NTAA FBT seminar notes) can be used as guidance in accounting for entertainment expenditure:
- Motor Vehicle Fringe Benefit Tables
- Meal Entertainment Flowchart
- Implications under the “Actual Method”
- Implications under the “50/50 Split Method”
If you think that any of the above ‘other’ fringe benefits may apply to you or your business, please contact us on (03) 9551 2822 to discuss.