Dealers need to ensure they’re being compliant with Fringe Benefits Tax, particularly over the holiday season where potential fringe benefits arise.
Dealers providing certain benefits to their employees throughout the year, including over Christmas and the New Year period should be aware of Fringe Benefits Tax.
Fringe Benefits Tax, or FBT, is paid by employers on specific benefits they provide their employees and even their associates. It’s separate from income tax and works on a different calendar too.
Unlike the financial year which runs from July 1 to June 30, the FBT year spans from April 1 to March 31.
Providing your employees with end of year entertainment, including food, drink or recreational activities is one example of a benefit that may require you to pay FBT. This is something that many Dealers will do in the coming months and so it’s important to be aware of your responsibilities.
Other examples of benefits received by employees that can attract FBT include:
- Paying an employee’s private health insurance
- Giving an employee an interest free loan
- Allowing employees to use work vehicles for private purposes
- Covering non-business expenses of employees
Employer Responsibilities
Employers have a responsibility to record all fringe benefits provided to individual employees.
What’s more, you should understand the difference between included (and exempt) benefits, when to report fringe benefits on your employees’ payment summaries and how to calculate the amount of FBT you have
to pay.
Benefits provided to contractors and volunteers are generally not included in FBT. Also, employers are usually able to claim an income tax deduction for the cost of providing the fringe benefits and for the FBT they pay.
Like all matters pertaining to the Australian Taxation Office, ultimately compliance is the order of the day. Dealerships that are aware of their FBT responsibilities (and comply with them) will avoid penalty.
To find out more about FBT get in touch with your professional accounting advisors.