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13 Mar 2018

Fringe Benefits Tax in 2018

31 March marks the end of the 2018 FBT year. Here’s a list of what you need to know.

1) ATO Compliance Activity

The Australian Tax Office (ATO) has recently outlined key compliance areas they will be focusing on this year:

  • Car benefits including car logbooks
  • Correct calculation and reporting of Living Away From Home Allowance (LAFHA) benefits
  • Employee rewards programs
  • Housing benefits
  • Benefits provided to directors of private companies
  • Businesses that are providing fringe benefits but are not registered for FBT.

If you are unsure about any of the areas listed above, please contact your Ipsum advisor.

2) Car Odometer Records 

Remember to record the closing odometer reading on 31 March for all business vehicles used by employees.

3) FBT Rate Reduction

The FBT rate was reduced by 2% on 1 April 2017 from 49% to 47%.

4) Small Business Exemption for Portable Electronic Devices

Businesses with an annual turnover of less than $2 million can offer employees multiple work-related portable electronic devices, such as mobile phones, laptops and tablets and not have to pay any FBT, even if the device is similar or identical to one that was already provided in that FBT year.  Businesses with a turnover of more than $2 million are limited to providing one device of each type per FBT year to an employee.

5) Review Your Salary Packaging Agreements

It is essential to regularly review any employee salary packaging agreements to ensure they are effective and meet the requirements of the FBT legislation.  The basic requirements for a complying salary package agreements are:

  • The benefits form part of the employee’s remuneration i.e. the benefits are replacing amounts that would have been payable as salary.
  • It is documented in writing. The employee must agree in writing to forgo a certain amount of income before that income has been earned, in return for the business providing other benefits to the employee.
  • The sacrificed salary must be permanently forgone. If a fringe benefit is not provided and the sacrificed amount is subsequently paid to the employee, it is taxable as ordinary wages.

For more information, speak to your Ipsum advisor.