Can I claim Fringe Benefits Tax (FBT)?

As a business owner, here’s what you need to know about Fringe Benefits Tax, its benefits and your taxation obligations

Fringe Benefits Tax is a tax payable by you on any benefits you have paid to employees in place of salary or wages. Fringe Benefits can be a useful way of attracting and retaining quality staff as they are perceived as a non-cash incentive or as a salary packaging option.

Fringe benefits include any rights, privileges or services provided to current, former or future employees or directors of a business. Common benefits include; utilisation of work vehicles for private purposes; low or no interest loans, school fees, health insurance, gym memberships and entertainment such as food, drink or recreation.

Fringe Benefits tax

FBT was created when the government realised that employers were being creative when paying benefits instead of salary. The most common fringe benefit is for where the employer picks up the cost of the car and provides the car for their employees’ use.

Advantages for small businesses of paying Benefits

As a business owner – you will likely have your own expenses that can be paid for by the business rather than out of your salary or drawings. The amount of tax on a FB payment is the same as personal tax i.e. 47{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357}, rather than company tax of 27.5{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357}. However, as a business, you can claim the GST component and receive the tax deduction for the expense. There may or may not be tax advantages to you in offering fringe benefits to your employees. If you are offering them or considering offering them, talk to us to see whether it will be beneficial to you or not.

What is not classed as a Fringe Benefit?

Superannuation, salary, wages, termination payments and shares acquired under employee approved schemes are not subject to FBT.  Additionally, work-related items such as tools of the trade, mobile phones, computer software, some car parking, protective clothing and minor expenses under $300.

What do I need to do if I am providing Fringe benefits to employees?

Firstly, you need to check if you are registered for FBT. We can do that for you. Secondly, you need to keep all records related to the benefits and then report it. The FBT year runs from 1 April to 31 March and you will need to submit this information to your accountant for it to be lodged. Lastly, you will need to pay your FBT liability to the ATO.

The calculations for establishing the FBT amounts can be quite complicated, depending on the type of benefit and whether it includes GST or not. At RJ Sanderson Wealth Management we make the process simple and calculate this for you. To arrange a discussion to talk about your Fringe Benefits Tax options and obligations, call on 1300 27 28 29.
This article is published by R J Sanderson and Associates Pty Ltd ABN 71 060 299 783. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.

When Financial Planners and Accountants Collaborate – YOU WIN

Arm yourself with many perspectives; create diversity among your professional advice team. And experience the power of having a team of financial professionals working together to create your lifestyle potential.

Financial Planners and Accountants

Financial Planners and Accountants working together means: 1+1=3 or even 5

At RJS Wealth Management, these two financial professionals are able to work together, so you can experience the dynamic combination of Financial Planners and Accountants working as one towards a common goal (your lifestyle potential). A team of financial experts sharing their skills and experience can be far more valuable than an Accountant and/or a Financial Planner working independently. Why? For many reasons but often simply because of professional pride. When finance professionals work together, 1+1 can really = 3 or even 5. They can bounce energy and ideas off each other, turning every stone to find what more is possible for you. Each professional has a different qualification, a different expertise and a different lens that could be used to help you.

What an Accountant might be best at

Accountants may be qualified as a CPA or CA, but unless they are authorised as a representative under an Australian Financial Services Licence (AFSL), they cannot provide financial strategy nor financial product advice. They can advise on plenty of other business and personal related matters, like tax planning, advice and strategy (GST, CGT, Income, Sales and many more) as well as depreciation, and small business advice like business advisory, business structuring, business insurances, budgeting and reporting compliance2.

While the tax and reporting side can be important to do well and get right, the area where a great deal of value could be added, is in business advisory. Business advisory specialists could advise on the best practices for a particular industry, business and situation. Modoras business advisory specialists assist businesses with cashflow management, growth planning and projections, risk management and succession planning.

How your Financial Planner can add the most value

With financial strategy advice that is tailored to individual financial circumstances. Before they give any advice, they can ensure they find out as much as they can about you and your financial goals2. They can also (if appropriate and with permission) speak to your Accountant to get an idea of what your personal or business financial situation is, so they can take this into account when developing a plan for your financial future. Your planner can also help you protect what’s most important to you. Perhaps through structuring your wealth and/or insurances such as life, critical illness, total and permanent disability and income protection.

Financial Planners and Accountants

Good things happen when Accountants and Financial Planners work together

RJS Wealth Management was built on the foundation of co-operation between financial professionals. Our success rests on seeing the value of sharing knowledge and skills. So invite us along on your financial journey. You’ll be amazed how far our expert guidance can take you.  Call us on (03) 9794 0010.

1. Mansfield FP – June 2017: Accountant vs Financial Planner
2. American Express – Small business Articles: The difference between your Accountant and your Financial Planner.

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This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.