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An Australian Business's Guide to Fringe Benefits Tax (FBT)

Throughout the experience of running a business in Australia, one of the most central concepts that any company owner will deal with frequently is tax.


Whether it concerns tax returns and deductibles or filing and payment deadlines, dealing with duties under the Australian Taxation Office (ATO) can be a long-winded process. Seeing the range of details involved in trying to get a hold of the financial complexities that come with handling tax, it’s clear that the list of concepts to get familiar with will never end.


Among all the different concepts and topics that have come up in the Australian taxation world over time, there’s one that still draws more curiosity: the Fringe Benefits Tax (FBT).

Are you supposed to be registered for Fringe Benefits Tax?

Before all else, one aspect that any business owner getting familiar with FBT should come to grips with is whether or not they need to be registered for it.


While there may be many different ways to approach the concept of verifying your validity for this tax, rule of thumb dictates that there are specific conditions that must be met. Generally, you’ll need to pay for FBT if you have employees (including directors) who you provide with cars, parking, employee discounts, entertainment, and private expense reimbursements, all of which are classified as fringe benefits!

Specific items that are exempt

When it comes to determining which expenses you’ll need to submit and make tax payments for, it’s essential to understand that there are some items that you won’t have to account for. Specific goods and items, such as laptops, mobile phones, tablets, protective clothing, or other tools of the trade which are less than $300 in value won’t require you to make additional payments. As long as an item is both minor and infrequent, it won’t qualify as an FBT-eligible expense. Yet, it’s best to seek clarification from a dependable accountant before making assumptions!

On lodging amid a lack of available FBT-eligible expenses

At a specific period, you’ll most likely run into an issue where you’ll have to determine whether or not you should lodge an FBT return even if none are payable. This is essentially a problem that companies aplenty have also faced.


Generally, the best practice when it comes to whether or not you should lodge a payment is that you should still proceed with doing so even if no legal obligation exists. By taking the time to make your returns despite not having any items to list, you can reduce the ATO’s audit window for your business to only three years so that you can save yourself more time and fewer expenses!

Is there any way to reduce your FBT liability?

One of the many aspects of paying Fringe Benefits Tax that any company owner should be familiar with is that there are many ways to cut your payables with a few simple tasks. For instance, replacing your fringe benefits with a cash salary, providing benefits exempt from FBT, and opting to provide benefits that employees can claim as an income tax deduction are all clear-cut ways to reduce your payables. However, best practice dictates that the best approach to achieving reduced liability is to enlist the help of an experienced Australian accountant—such as New Wave Accounting—to help you exploit different opportunities!

Conclusion

As an Australian business, you must grow familiar with the concept of Fringe Benefits Tax as you turn your workplace into a much more enjoyable one because of all the additional costs involved. Through the help of this simple yet practical guide, you can circumvent the entire process and make sure that all your financial affairs are in order!


We're a small business accounting firm in the Gold Coast that specialises in company set-ups, outsourced bookkeeping and accounting services, and Xero consultancy. Get in touch with us today to see how we can help keep your business in peak financial shape!

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