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Are You Ready for FBT?

Article By Adam Hurwood | | Accounting & Tax
With the end of the 2016 Fringe Benefits Tax (FBT) year occurring 31 March, it is important to review your financial records to identify any benefits that have been provided during the last 12 months. Any non-salary benefits provided to an employee or their associate (e.g. spouse or other family member), is likely to be considered a fringe benefit. Not reviewing records now, could lead to more significant tax implications later.

The following are examples of common benefits provided:

Private use of business Motor Vehicle

The most common fringe benefit provided to employees arises when a vehicle is used or able to be used for private use. Allowing employees to drive vehicles to and from work is considered a fringe benefit.

Entertainment

Entertainment for employees (and their associates) includes:
• Meals and drinks, cocktail parties and staff social functions such as Christmas parties
• Tickets or vouchers for sporting or theatrical events, sightseeing tours and holidays
• Entertaining employees over a weekend at a tourist resort or sending them on a holiday

Not all food and drink is considered to be provision of entertainment, such as morning or afternoon teas at work are not usually included.

Expense Payments

Paying personal expenses on behalf of employees is considered a fringe benefit. Common payments include personal motor vehicle expenses, insurance premiums, mobile phone or internet expenses. While a portion of these expenses may be considered work related use, direct payment can create a fringe benefit tax implication.

Travelling Expenses

When an employer pays for business related travel, the FBT cost can be reduced to zero. However, when private travel is more than merely incidental, there will be FBT implications. For instance, a 3 week overseas trip to attend a 5 day business conference may also include private travel costs.

If you have or are unsure as to whether you have provided a benefit to your employees and their associates, a Fringe Benefits Tax return may need to be prepared. Please contact your Altitude accountant and we will be happy to discuss further.