Fringe Benefit Tax (FBT) year is coming to an end, are you ready?
The FBT year end is fast approaching and set to close on the 31 March 2016. FBT applies to non-cash benefits provided to an employee (or associate of the employee) in respect of employment.
This tax which is often overlooked is levied on the employer and catches many small business owners who legally employee themselves through a trading structure.
To ensure FBT issues around the employer’s motor vehicles can be handled in an effective manner please check that you have updated all necessary log books and taken the required odometer readings. An employer will generally be required to keep a log book in the first year of the purchase of the vehicle and then every five years after. The log book must be kept for a minimum of 12 weeks.
Each entry into the log book must contain the following:
- The purpose of the trip;
- The date when the trip commenced and finished;
- The odometer reading at the beginning and end;
- The number of kilometres travelled on the journey;
- The record must be in English; and
- The entry should be made as soon as practical after the journey.
Employers should be aware that there are many different types of fringe benefits that need to be considered before 31 March 2016.
Some of the main fringe benefits that are common to small business are:
- Car fringe benefits (employer supplies a work vehicle to an employee);
- Loan fringe benefits (employer provides an interest free or low interest loan to an employee); and
- Meal/entertainment fringe benefits (employer provides entertainment/recreation and some meals to an employee).
If you are unsure if FBT applies to you or to find out more about it, feel free to contact us to discuss FBT and possible solutions.