Fringe benefits tax

Did you throw a party for your employees to celebrate the festive season?

If so, you need to consider whether you have any FBT obligations associated with the party. If you also gave your employees a gift, there may be an FBT implication too.

It also makes a difference whether the party was held on your business premises or somewhere else.

If the cost of everything per person is less than $300, you may have provided a ‘minor benefit’ which may be exempt from FBT.

Your tax adviser will be able to tell you whether there are any FBT implications for your business for the party and the gifts.

Private use of cars and FBT

A car fringe benefit may arise when your business owns or leases a car and makes it available for an employee to use for private travel. It is the availability of the car for private use by an employee that is the ‘fringe benefit’.

A car is ‘available for private use’ if it is garaged or kept at or near the employee’s residence at any time on a day. Generally speaking, using the car to travel to and from work is ‘private use’ of the car.

If your business has recently acquired a car, you may have received a letter from the ATO to help you understand what your FBT obligations might be. If you are not sure what your FBT obligations are, you should speak with your tax adviser.

An ‘employee’ also includes a director.

The FBT rules are being reviewed

Board of Taxation FBT Compliance Review

The Board of Taxation is conducting a review into the compliance costs associated with fringe benefits tax. They recently ran a survey which employers could complete to provide information to the Board about their own experience with FBT compliance costs.

Shortly the Board will make recommendations to the Government about whether any changes to FBT compliance are required. However, as is typical of government reviews, it may be a while before any changes are made.

Productivity Commission review into the Zone Tax Offset, Fringe Benefit Tax remote area concessions and Remote Area Allowance

In February 2019, the Productivity Commission intends to begin a review into ‘remote tax assistance’ – the Zone Tax Offset, Fringe Benefits Tax remote area concessions and Remote Area Allowance – which provide financial support to people living in remote areas of Australia.

Eligibility for assistance is determined by geographical location divided into zones. The zones have been largely unchanged since 1945. The main concern from this is that the current financial support doesn’t reflect the current status of demography, infrastructure and the cost of living.

The Productivity Commission is not due to report for 12 months following commencement of the review. So, any change in this area may not occur for a long time.

For further information on FBT visit this link – Fringe benefits tax (FBT)

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Thompsons Australia Newsletters and articles are distributed by professional tax practitioners to provide information of general interest to our clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.