Fringe Benefit Tax: Record Keeping Tips For Your Small Business


Job perks – most businesses offer them and employees love them. From discounted products and free meals to gym memberships and accommodation, these common employee benefits are a great way to reward, retain, recognise and attract staff beyond standard salary and wages. 

But they can also catch the eye of the Australian Tax Office (ATO). Technically they are known as ‘fringe benefits’ and as such, they are subject to Fringe Benefit Tax (FBT). 

FBT is a tax applied to certain benefits that employers provide to their employees or their employees’ associates (such as family members) in addition to their salary or wages. Employers are responsible for paying FBT on the benefits they offer employees.  

Employers are required to pay FBT on the taxable value of fringe benefits, which is usually based on the cost of providing the benefit.  When it comes to FBT, keeping accurate and organised records are crucial. Not only will it make your life easier at tax time, it means you’ll stay compliant with Australia’s notoriously complex tax laws.  

Here’s some tips to accurately record and report your FBT. 

Identify fringe benefits  

Start by identifying all fringe benefits you provide. For small businesses, these typically include accommodation, parking, meals, taxis/ride sharing, entertainment and recreation. For a full list of fringe benefits, download our free guide. 

Employee declarations  

Obtain declarations from employees who receive fringe benefits. These declarations should detail the benefits they have received and are essential for FBT calculations*. 

Valuation of fringe benefits  

Accurately value each fringe benefit. The ATO offers specific guidance for valuing different types of fringe benefits. Keep records of the methods you used for valuation. 

Maintain documentation  

Keep all relevant records, documents, and receipts that support your FBT calculations and claims. This includes invoices, receipts, agreements, and any other relevant documents. 

FBT returns  

Prepare and lodge your FBT returns accurately and on time. Ensure that the information reported matches the records you have maintained. 

Employee records  

Maintain comprehensive records for each employee, including details of their employment, salary packages, fringe benefits received, and any changes to their employment conditions*. 

Business expenses  

Separate business-related expenses from private expenses, especially when providing fringe benefits. Keeping business expenses separate will help you accurately calculate FBT liability. 

Electronic record-keeping  

Consider using electronic record-keeping systems to manage and store FBT-related documents efficiently. This can simplify the process and reduce the risk of losing important records. 

Related: Need help managing and calculating your FBT? Download our Essential Guide to Fringe Benefit Tax. 

Periodic reconciliation  

Regularly reconcile fringe benefits provided with your financial records and declarations to ensure accuracy and identify any discrepancies 

Seek professional advice  

FBT regulations can be complex and subject to changes. Consider consulting a tax professional or a Retinue accountant with expertise in FBT to ensure compliance and optimise your FBT strategies 

Remember that maintaining accurate records not only helps with FBT compliance but also provides valuable information for financial planning and decision-making in your business. 

Frustrated with Fringe Benefit Tax? Let us take the hassle out of it for you. Retinue can be your accounting partner offering tax compliance, bookkeeping, payroll* and financial insights with 24/7 unlimited support, for a fixed monthly fee, all backed by our guarantee. Request a quote to get started. 

*Retinue’s payroll service includes the processing of hours and wages rates provided by you. We do not determine award rates for your employees or provide advice on the correct employment status of your employees. It is your responsibility to ensure that your employees are paid correctly and we recommend obtaining advice from specialised employment relations experts.

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