On 31 March 2023, the Fringe Benefits Tax (FBT) year ends. To help you meet your FBT obligations, we have put together a list of essentials every employer needs to know about FBT and review every year, such as:
- Should I be registered for FBT?
- Should I lodge a FBT Return even if no FBT is payable?
- Key things you should do on 31 March 2023
- What is exempt from FBT?
- How can I reduce my FBT liability?
These questions are answered for you below. We also have a number of specially prepared FBT Factsheets that you can request from us to help you better understand your FBT obligations as a business owner.
Should you be registered for FBT?
Generally, if you have employees (including Directors) and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT. There are 13 defined Fringe Benefit categories in the FBT law.
It is important you start gathering all the details of these provided benefits as soon as possible using our annual FBT Questionnaire and Schedules, so we can calculate any potential FBT liability and lodge your FBT return on time.
If you have a FBT liability, or paid FBT instalments on your activity statements, you need to lodge your FBT return by 22 May 2023 (as the statutory due date of 21 May falls on a weekend this year), or by 25 June 2023 if lodged by a Wilson Pateras tax agent electronically.
Should you lodge an FBT Return even if no FBT is payable?
Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway?
Our recommendation to you is yes, you should lodge an FBT Return if you provide benefits to employees, even if no FBT is payable.
This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you FBT and penalties.
Key things you should do on 31 March 2023
Whilst we recommend that you register for FBT and if applicable lodge a Nil FBT Return, if you decide not to there is still key information that you should record as at 31 March 2023. We will then rely on this when we complete your 2023 annual Financial Statements. Here is a summary of what you should do:
- On Thursday 31 March 2023, when the employees have finished their travel for the day request your team each take a photo of their vehicle odometer readings using their phones and email it the photo to you, or to a nominated person in your business to collate them all for you. Having these vehicle odometer readings for all business vehicles will enable us to identify if your FBT can be reduced by using the ‘operating cost’ method instead of the ‘statutory formula’ method
- Carefully manage the private use of business cars, including the travel between home and work. The ATO is conducting a data matching program aimed at motor vehicles to capture benefits that aren’t currently being reported through FBT. If significant variances are identified a full ATO audit may follow.
- Review all meal entertainment expenses provided to employees, associates and clients and prepare a register that outlines the following for every event:
- The total cost (GST inclusive)
- How many employees were present and their names
- How many employees’ associates were present and their names
- How many clients were present (names not needed)
- The nature of the event (dinner, lunch, coffee, drinks, etc.)
Consider if you have provided any other fringe benefits as highlighted in the FBT Questionnaire.
What items are exempt from FBT?
The following items are unlikely to be subject to FBT: mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc, or minor and infrequent benefits that are less than $300 in value.
To find out if you are eligible for the minor and infrequent benefit exemption – please ask us to send you our Applying the Minor & Infrequent Benefits Exemptions factsheet.
You can fill out our FBT Questionnaire and Schedules to be 100% sure.
Ways you can reduce your FBT liability
Here are some ways in which you can reduce your FBT liability:
- replace your fringe benefits with cash salary;
- provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
- look at providing benefits that are exempt from FBT; and
- use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don’t reimburse them for. You need to be aware that employee contributions will be deemed assessable income to you and subject to GST.
Next Steps
The FBT year ends on 31 March 2023, so be sure to complete and return the FBT Questionnaire and Schedules to our office as soon as possible so you don’t miss the lodgement date of 27 June 2023 and meet the payment due date of 27 June 2023.
