Your 2024 Fringe Benefits Tax Return Guide

On 31 March 2024, the Fringe Benefits Tax (FBT) yearends. With the ever-increasing budget deficits as a result of COVID-19, the ATO will be reviewing whether all employers who should be paying FBT are paying it,and that they are paying the right amount. The ATO has recently announced that the ‘FBT gap’ is now over $1.3 billion and will be deploying resources for FBTcompliance to close this gap.

To help you meet your FBT obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:

These questions are all answered for you below:

1.    Should You Be Registered For FBT?

Generally, if you have employees(including Directors) and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT. There are 13 defined Fringe Benefit categories in the FBT law.

It’s important you start gathering all the details of these provided benefits as soon as possible using our annual FBT Questionnaire and Schedules, so we can calculate any potential FBT liability and lodge your FBT return on time – due 25 June 2024with payment to be made by 25 June 2024.

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2.    Should You Lodge an FBT Return Even If No FBT Is Payable?

Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway?

Our strong recommendation to you is yes, you should lodge an FBT Return if you provide benefits to employees, even if no FBT is payable. 

This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you FBT and penalties.

3. Key Things You Must Do on 31 March 2024

Whilst we strongly recommend that you register for FBT and if applicable lodge a Nil FBT Return, if you decide not to there is still key information that we need you to record as at 31 March2024. We will then rely on this when we complete your 2024 annual Financial Statements. Here’s a summary of what you need to do:

a.   On Sunday 31 March 2024, when the employees have finished their travel for the day request your team each take a photo of their vehicle odometer readings using their phones and email it the photo to you, or to a nominated person in your business to collate them all for you. It is vital for us to have these vehicle odometer readings to be able to determine if your FBT can be reduced by using the ‘operating cost’ method instead of the ‘statutory formula' method.

b.   Carefully manage the private use of business cars, including the travel between home and work. The ATO is conducting a data matching program aimed at motor vehicles to capture benefits that aren't currently being reported through FBT. If significant variances are identified a full ATO audit may follow.

c.    Review all meal entertainment expenses provided to employees, associates and clients and prepare a register that outlines the following for every event:

The total cost (GST inclusive)

• How many employees were present and their names
• How many employees’ associates were present and their names
• How many clients were present (names not needed)
• The nature of the event (dinner, lunch, coffee, drinks, etc.)

The FBT Questionnaire has a meal entertainment sheet that will simplify this for you.

d.   Consider if you have provided any other fringe benefits as highlighted in the FBT Questionnaire.

4. What Items are Exempt From from FBT?

The following items are unlikely to be subject to FBT:

• mobile phones,
• laptops,
• tablets,
• portable printers,
• protective clothing,
• tools of trade etc,
• or minor and infrequent benefits that are less than $300 in value.

To find out if you are eligible for the minor and infrequent benefit exemption – please ask your accountant at R J Sanderson.

You can fill out our FBT Questionnaire and Schedules to be 100% sure.

5. Ways you can Reduce your  FBT Liability 

Here are some ways in which you can reduce your FBT liability:

• replace your fringe benefits with cash salary;
• provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
• look at providing benefits that are exempt from FBT; and
• use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don't reimburse them for. You need to be aware that employee contributions will be deemed assessable income to you and subject to GST.

Next Steps

The FBT year ends on 31 March 2024, so be sure to complete and return the attached FBT Questionnaire and Schedules to our office as soon as possible so you don’t miss the lodgement and payment due date of 25 June 2024.

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We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability or creating effective salary sacrifice arrangements.

Staying informed about your tax obligations for your business is critical. By understanding the rules, exemptions, and changes, you can ensure compliance and minimise your tax obligations. For tailored advice specific to your business, book a consultation with an R J Sanderson professional to help take the stress out of tax.