Your Ultimate Guide to the 2023 Fringe Benefits Tax (FBT)

As we step into the 2023 FBT year, it's crucial for employers to be well-informed about their tax obligations. The Fringe Benefits Tax (FBT) in is a tax levied on employers for certain non-cash benefits provided to their employees, including their employees' family members. To ensure you're compliant with the latest rules and regulations, we've put together this comprehensive guide on the 2023 FBT, along with a downloadable FBT Questionnaire to help you stay organized.

Understanding Fringe Benefits:

Fringe benefits are non-cash perks provided by employers to their employees. These can include items such as company cars, low-interest loans, gym memberships, or even school fees for employees' children. It's essential to be aware of which benefits are subject to FBT to avoid any unpleasant surprises come tax time.

Fringe Benefits Tax Rates:

For the FBT year commencing on April 1, 2023, the FBT rate remains at 47%. This rate applies to the taxable value of the fringe benefits provided by the employer, and it's important to calculate it correctly to ensure accurate reporting.

FBT Exemptions and Reductions:

Several exemptions and reductions can help reduce the FBT liability for employers. These include:

• Minor Benefits: Fringe benefits with a taxable value of less than $300 are considered minor benefits and are exempt from FBT.‍
• Work-Related Items: Items such as laptops, mobile phones, and protective clothing, provided primarily for work-related purposes, are exempt from FBT.‍
• Remote Area Benefits: Employers in remote areas can access specific FBT concessions, including reduced taxable values for housing benefits and exempt fly-in, fly-out arrangements for employees.‍
• Not-for-Profit Organizations: Certain not-for-profit organizations may qualify for a rebate or exemption from FBT.

Record-keeping for FBT:

Employers must maintain accurate records for all fringe benefits provided to employees. This includes keeping track of the benefits, the employees receiving them, and the taxable value of each benefit. The Australian Taxation Office (ATO) provides guidance on the required documentation, which must be retained for a minimum of five years.

FBT Return and Payment:

Employers are required to lodge an FBT return and pay the associated tax by May 21, 2023. To ensure timely lodgment, it's essential to begin preparing your FBT return well in advance. If you're registered for electronic filing, you may be eligible for a later lodgment date.

Key FBT Changes in 2023:

It's crucial to stay up to date with changes in FBT rules and regulations. For the 2023 FBT year, the main changes include:

• Updated car parking thresholds: The car parking threshold has increased to $9.25, affecting the valuation of car parking fringe benefits.
• Indexed gross-up rates: The Type 1 and Type 2 gross-up rates have been updated to 2.0802 and 1.8868, respectively.

Next Steps:

The FBT year ends on 31 March 2023, you don’t miss the lodgement date of 27 June 2023 and meet the payment due date of 27 June 2023. Download the FBT Questionnaire here and be sure to return the completed FBT Questionnaire to our office as soon as possible. Or you may email them to renee@rjsanderson.com.au.

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.

‍