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.
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.
Obtain declarations from employees who receive fringe benefits. These declarations should detail the benefits they have received and are essential for FBT calculations*.
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.
Keep all relevant records, documents, and receipts that support your FBT calculations and claims. This includes invoices, receipts, agreements, and any other relevant documents.
Prepare and lodge your FBT returns accurately and on time. Ensure that the information reported matches the records you have maintained.
Maintain comprehensive records for each employee, including details of their employment, salary packages, fringe benefits received, and any changes to their employment conditions*.
Separate business-related expenses from private expenses, especially when providing fringe benefits. Keeping business expenses separate will help you accurately calculate FBT liability.
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.
Regularly reconcile fringe benefits provided with your financial records and declarations to ensure accuracy and identify any discrepancies
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.
*Retinue’s (ABN 66 658 618 449) 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.
Protection is only provided for ATO investigations notified to us during the period which you are a client and relating to any tax returns or lodgements prepared by us. Fines includes any penalties and interest that may result from any errors made by us but does not include any additional tax liability that may result from an amended lodgement.
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