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 2017. 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.
Employers should be aware that there are many different types of fringe benefits that need to be considered before 31 March 2017.
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).
Fringe benefits change for tax offsets from 1 July 2017
The ATO has issued a reminder that the government has changed the way fringe benefits will be treated for the calculation of several tax offsets from 1 July 2017.
The meaning of 'adjusted fringe benefits total' (which is used to calculate a taxpayer's entitlement for the low income superannuation tax offset, the seniors and pensioners tax offset, the net medical expenses tax offset and the dependent tax offset) has been modified so that the gross, rather than the adjusted net value, of reportable fringe benefits is used.
Fringe benefits received by individuals working for registered public benevolent institutions, registered health promotion charities, some hospitals and public ambulance services will not be affected by this change.
This aligns the treatment for tax offsets to the treatment for the income tests for family assistance and youth payments.
If you are unsure if FBT applies to you or to find out more about it, feel free to contact us before 31 March 2017.