What is Fringe Benefits Tax and How Does it Affect Employers?
As a business owners in Inner West Sydney, Belrose Northern Beaches, you know that providing your employees with more than just a salary is important for building a positive workplace culture. But did you know that some of those benefits may be subject to Fringe Benefits Tax(FBT)?
FBT is a separate tax from income tax that employers must pay on certain benefits provided to their employees or their associates. These benefits can take many forms, such as providing a company car for personal use or paying for an employee’s gym membership. While it may seem like just another tax to add to your list, understanding FBT can help you make strategic decisions about the benefits you offer and potentially even save you money.
What Qualifies as a Fringe Benefit?
Examples of fringe benefits include:
Allowing an employee to use a work car for private purposes
Paying an employee’s gym membership
Providing entertainment by way of free tickets to concerts
Reimbursing an expense incurred by an employee, such as school fees
Giving an employee a discounted loan
Giving benefits under a salary sacrifice arrangement with an employee.
It’s important to note that not all benefits are subject to FBT. For example, salary and wages, super contributions, and certain benefits provided by religious institutions to their religious practitioners are exempt.
How is FBT Calculated?
To determine the FBT you owe, you must first calculate the taxable value of the fringe benefits you’ve provided. You then ‘gross-up’ this value to determine the equivalent gross income your employees would have to earn, at the highest marginal tax rate, to buy the benefits themselves. Finally, the FBT you owe is 47% of this ‘grossed-up’ value.
For example, if you provide an employee with a gym membership that costs $1,100 (including GST), you would calculate the FBT as follows:
Taxable value of the benefit ($1,100) x the gross-up rate (2.0802) x the FBT rate (47%) = FBT of $1,075.46
While this may seem like a significant cost, it’s important to remember that employers can claim an income tax deduction and GST credits for the cost of providing fringe benefits, as well as an income tax deduction for the FBT paid.
What Do Employers Need to Do?
If you provide fringe benefits to your employees, there are a few steps you need to take to ensure you’re meeting your FBT obligations:
Identify the types of fringe benefits you provide
Check for FBT concessions and ways to reduce your FBT liability
Work out the taxable value of the fringe benefits you provide
Calculate your FBT liability
Keep records, including employee declarations where needed
Lodge an FBT return and pay the FBT you owe
Report each employee’s fringe benefits in their end-of-year payment information, if required.
By understanding FBT and how it affects your business, you can make informed decisions about the benefits you offer and potentially even save money.
Stop Worrying About Fringe Benefit Tax – EndureGo Tax is Here to Help
After you had read through all these information about Fringe Benefit Tax Return. Do you dread the thought of doing it? It’s not exactly the most exciting thing to do at night time after a hard work day, that is where EndureGo Tax steps in, we can help you to maximize the value out of the Fringe Benefit Tax Return.
Now, before you brush it off as just another piece of paperwork, let me tell you about the key differences that make this tax return stand out from the rest.
- The Fringe Benefit from 1 April to 30 March the following year, unlike the traditional 1 July to 30 June period.
- It’s not just a matter of filling out the form – you need to register with the Australian Taxation Office (ATO) beforehand, otherwise they won’t have a record of your return.
But why should you care about the Fringe Benefit Tax Return? Well, for starters, it’s specifically designed for employers who provide fringe benefits to their employees. That means if you offer things like company cars, health insurance, or even free coffee in the break room, you could be subject to this tax.
But don’t worry, it’s not all bad news. By completing this return, you can actually save money in the long run. The ATO offers a range of exemptions and concessions that could reduce your taxable amount, meaning more money in your pocket.
So, if you’re an employer who offers fringe benefits, don’t let this tax return slip under your radar. With a little bit of effort, you could be saving yourself a significant amount of money. Now, that’s something worth getting excited about!
Finally, a Fringe Benefit Tax Return Solution That Won’t Leave You Stressed: Endurego
Are you tired of being constantly bombarded with complex tax computations for your business’s fringe benefits? Look no further than Endurego, the leading CPA accountant and tax agent in Inner West Sydney, Belrose Northern Beaches, and Adelaide.
At Endurego, we understand that navigating the complex world of fringe benefit tax returns can be a daunting task. That’s why we specialize in providing our valued clients with expert advice and guidance on how to structure their private and entertaining expenses in a way that meets Australian Taxation Office regulations.
Our team of experienced professionals is committed to helping you achieve the best possible outcome for your business, no matter how challenging the task may seem. With our comprehensive understanding of the intricacies of fringe benefit tax, we can help you optimize your tax return and minimize your tax liability.
Whether you’re a small business owner or a large corporation, we have the expertise and knowledge to help you stay ahead of the curve. So why wait? Book online at www.endurego.com.au today, and let us show you how we can help you succeed!
Expert Fringe Benefit Tax Return services
Specialist in complex computations
Trusted CPA accountant and tax agent
Serving Inner West Sydney, Belrose Northern Beaches, and Adelaide
Comprehensive understanding of ATO regulations
Optimize your tax return and minimize your liability
At Endurego, your success is our success. Contact us today, and let us help you achieve your accounting and taxation goals!