Tax Focus:Common FBT Exemptions

Written on the 14 April 2014 by Macmillans Waller Fry - Accountants in Maitland

With the Fringe Benefits Tax deadline fast approaching, small businesses should review some of the key FBT issues.

The FBT for the year ending 31 March 2013 is 46.5%, on the grossed-up taxable value of fringe benefits provided to employees during the FBT year.

Common fringe benefits exempt from the tax include:

• Newspapers and periodicals provided for business purposes
• Workers compensation
• Work site medical facilities
• Meals provided by the employer and consumed on work premises
• Minor benefits less than $300 that are provided infrequently
• Work related items such as protective clothing, briefcases, calculators, tools of trade, notebook computers, electronic diaries and personal organisers
• Taxi travel to and from work

Self assess liability

FBT is a self assessment system, with large penalties for underpayment. Certain employers may pay FBT by instalments. An Maximising travel expense claimsof running the car such as fuel, registration, insurance, services and maintenance can be claimed with the submission of written evidence and invoices as proof. Logbook methodThe requirement is that the logbook be kept for 12 weeks, which serves as sufficient record of usage with the same car for the next five years. The logbook helps calculate the business percentage usage of the car which should be somewhere between 80 to 95 per cent, and allows most running and maintenance, finance costs and depreciation or lease expenses to be claimed. This method leads to the largest tax deduction as long as all receipts are kept and the logbook entries can be substantiated.Like most self assessment claims, it is up to the claimant to keep thorough evidence to support any deductions submitted to the ATO. An employer whose previous year’s FBT liability was at least $3000 must pay in quarterly instalments, rather than annually by 21 May.

Employees payment summary

If the business provides fringe benefits with a total taxable income of more than $2,000 in the FBT year, then the grossed-up taxable value of $3,738 must be reported in the employee’s payment summary for the corresponding income year.

Record keeping exemption

An employer that provides fringe benefits in a year below $7642 for the 2012/13 financial year may be exempt from keeping FBT records.