The Fringe Benefit Tax (FBT) is imposed on benefits given to employees, and the employer is responsible for paying the FBT. The FBT rate is approximately 90% of the benefit value.
Even if you didn’t provide any fringe benefits, you may need to submit a Nil FBT return to limit the length of time the Australian Taxation Office (ATO) can audit your FBT history to three years.
If you don’t file an FBT return, the ATO may have an unlimited period to audit your historical FBT.
How do you know if you provide Fringe Benefits?
To determine if you provide fringe benefits, you first need to understand the various types of benefits subject to FBT. The following list covers some of the most common inclusions:
- Providing a company car for an employee’s private use
- Paying for car parking in a commercial car park within 1km of the workplace
- Providing entertainment, giving vouchers and coupons, sending gift cards
- Paying for employees’ personal travel
- Allowing employees to reside in the company’s properties
- Paying for employee expenses unrelated to business
- Buying coffee in staff meetings etc
For more information on the full list of Fringe Benefit Types check the current ATO guidelines and advice by clicking here.
What to do if you have provided Fringe Benefits
If you think you may have provided fringe benefits, it’s crucial to seek advice from experts to limit the ATO’s ability to retrospectively launch an audit on your business.
Even if you think you’ve complied with the legislation, mistakes can still happen, and seeking help from professionals can assist you in resolving any complex FBT issues.
What’s new in 2023 related to FBT Legislation?
The legislation for the exemption of Fringe Benefits Tax (FBT) on Electric Vehicles (EVs) has been passed.
This exemption implies that eligible EVs will not be subject to FBT, allowing companies to purchase EVs that can be used by employees for both personal and business purposes, while the cost incurred is fully deductible by the company.
To be eligible for this FBT exemption, the vehicle must be a battery electric vehicle, hydrogen fuel cell electric vehicle, or plug-in hybrid electric vehicle (which will expire on 1 April 2025).
It must also have a payload of less than 1000kg and a capacity for carrying less than nine passengers.
The original purchase value (in the hands of the first owner) must be less than $84,916 and must be first used by the employee after 1 July 2022.
Even a second-hand EV that was originally first used by the first owner after 1 July 2022 is still eligible.
Some examples of EVs that meet the above conditions include:
BYD Atto 3 EV
CUPPA Leon PHEV
CUPPA Formentor PHEV
Ford Escape PHEV
Hyundai Kona EV
Kia Nitro EV
Mini Hatch EV
Mitsubishi Eclipse Cross PHEV
Mitsubishi Eclipse Outlander PHEV
Nissan Leaf EV
Polestar 2 EV
and Tesla Model 3 EV.
If you need any further help and guidance with FBT our team is just a message away. Contact us and we will be happy to help!