Are you prepared for the FBT year end?
The date marking Fringe Benefits Tax year end —abbreviated as FBT year end— is fast approaching. The date is 31 March 2021, and there are a number of things small business owners need to have in order before it arrives. If you want to be prepared for the FBT year end, you’re in the right place. MSI Taylor will explain what your obligations are and how to make sure your lodgements are up to date and totalled correctly. Fringe benefits tax can be confusing – let’s work together to simplify it!
Do I have to register my business for FBT?
It’s like you need to register for FBT if you have directors and employees who you provide with parking spaces, cars, entertainment, employee discounts, or reimburse private expenses for. Basically, if it’s something that you’d describe as a “benefit” on a job advertisement, it might be a Fringe Benefit that you have to register.
You’ll have to prepare an FBT return and calculate your FBT liability based on the perks you offer your staff. If you work with a small business accountant and lodge your return electronically, then your FBT year end lodgement is due by 25 June 2021. If you decide to work on your own, you have until just 21 May 2021.
Which items are exempt from Fringe Benefits Tax?
It’s tricky to know what does and doesn’t count towards Fringe Benefits Tax. If you provide employees with mobile phones, tools, computers and other infrequent benefits that total less than $300, then you won’t have to worry about FBT year end. But, you have to be sure what is and isn’t exempt from FBT. Do so by reading up on the Australian Tax Office website. Alternatively, contact MSI Taylor for some expert tax advice right here in Brisbane.
Are workhorse vehicles exempt from Fringe Benefits Tax?
A workhorse vehicle is exempt from Fringe Benefits Tax if it satisfies the following conditions set out by the Australian Tax Office:
- If the driver diverts from their work-home travel route for any personal reason, that diversion must be less than two additional kilometres over the usual length of the trip. For example, if the trip from home to work is usually 10km, then a diversion to, say, drop off children at school, mustn’t make the trip longer than 12km.
- Private travel purposes must not exceed 750 kilometres in total for a given FBT year end.
- A single, return journey made by the employee for private purposes must never exceed 200km.
How can I reduce my FBT year end liability?
There are several things you can do to reduce your liability regarding FBT. Here are some great examples:
- Replace fringe benefits with cash salary.
- Provide benefits that are exempt from Fringe Benefits Tax.
- Provide benefits that your staff would be entitled to claim as income tax deductions (if they’d paid for the benefits themselves, that is).
- Have your employees contribute to the cost of a fringe benefit.
- Work with Brisbane tax accountants to reduce your tax liability.