This blog will highlight an overview of FBT, how FBT applies, what deductions you are allowed to claim, and what FBT obligations you need to meet.
What is Fringe Benefits Tax?
Fringe Benefits Tax is a tax paid by employers on some benefits offered to their employees, or their employees’ families or other associates. FBT is not an income tax. Taxable value of the fringe benefit is used to calculate FBT.
How Do You Get Your FBT Obligations Right?
If you have offered additional benefits to your employees apart from salary and wages, you must know your FBT obligations. If you file an FBT return or use a tax return accountant who files by paper, you need to file and pay the amount owed by 21 May 2025. If you use a tax accountant who files electronically on your behalf, you will have until 25 June 2025. If this is your first time filing through a tax professional, ensure you’re listed as a client for FBT purposes by May 21 to qualify for a concessional due date.
Some benefits you provide to your employees may be subject to FBT. These can include using a work vehicle (like dual cab utes) for personal use, gym memberships, and tickets to events. If you offered benefits during the 2025 FBT year, it’s important to understand how to file and pay.
To help you go through this process, follow these steps:
- Identify the types of benefits you provide.
- Calculate the taxable value of each fringe benefit.
- File your FBT return and pay by May 21 if you’re preparing it yourself. If your tax professional files electronically on your behalf, you have until June 25 to submit and pay.
- Maintain thorough records to support your calculations and FBT position when you file or pay by May 21.
- Don’t forget to include your current financial institution details (FID) when you lodge, to ensure any refund is deposited electronically. Missing this information could delay your refund.
You might be unfamiliar with the FBT obligations, so it would be better to ask small business accountants in Melbourne to help you meet your FBT obligations. They are experts in handling all types of tax matters since they keep themselves updated with the latest tax changes to help you stay on top of tax-related matters.
How Much FBT Do You Pay?
To check out how much FBT you need to pay, you gross up the taxable value of the fringe benefits you have provided. This is equal to the gross income of your employees would have to earn, at the highest marginal tax rate, to buy the benefits themselves. You are liable to pay 47% of this grossed-up value of the fringe benefits.
Are You Filing a Nil FBT Return?
If so, review whether you provided any fringe benefits and determine their taxable value to ensure accurate reporting and calculations. If you have no FBT liability and are registered, please submit a completed FBT notice of non-lodgment.
To guarantee refunds are deposited into the correct accounts, include your current bank account details with each submission.
Are You Liable to Claim GST Credits and Deductions?
As an employer, you are liable to claim:
- GST credits and an income tax deduction for the cost involved in providing fringe benefits
- if you can claim GST credits, you are eligible to claim the GST-exclusive amount as an income tax deduction
- if you can’t claim GST credits, you can claim the full amount as an income tax deduction
- an income tax deduction for the fringe benefits tax you have to pay.
What Record Do You Need to Keep for FBT?
You need to maintain records that:
- demonstrate how you calculated the taxable value of benefits
- support any FBT exemptions or concessions you used.
Here are the examples of these records:
- calculations
- worksheets
- elections
- invoices
- bills of sale
- logbooks
- travel diaries
- receipts
- employee declarations
- odometer records.
As an employer, it might seem difficult to record and maintain all these records, that’s why it would be worth considering seeking help from the small business bookkeeper.
Conclusion
As an employer, if you provide fringe benefits to your employees, you need to meet a few FBT obligations as mentioned above. If you find it difficult to stay updated with the latest FBT obligations, you can seek help from Reliable Melbourne Accountants.