Staff Benefits vs the Fringe Benefits Tax

Posted on by Mark Fernandez

Our guest columnist Anthony Raykos from Grant Thonton informs us of how the Fringe Benefits Tax applies to employee benefits.

Higher rental costs, weak retail sales growth, wage pressures and tighter lending can make non-cash remuneration options more attractive than traditional cash bonuses – but beware of the fringe benefits tax (FBT) implications.

FBT has the potential to apply where an employee is provided with a non-cash benefit and that benefit was provided because of the employment relationship.   “What about the staff lunch we had the other day?” you ask.  Well, the answer is…it depends….

We know you’ve got enough to worry about so we’ve included some things to look out for in your business practices and some tips to help you get your information sorted, so you can focus on what you do best and let your accountant deal with the technical side.

Cars

FBT can apply where a car is used partly or wholly for private purposes and the employer owns or leases the car (or pays the operating costs). 

There are two methods of calculating FBT on cars; the “operating cost method,” broadly based on the running costs, and “statutory method,” which is based on kilometres travelled.  One may produce a lower FBT liability so choose wisely.  Consider the following:

Entertainment

Living Away From Home Allowance (LAFHA) – Major changes proposed!

Other tips and traps

FBT exempt benefits – there are many!  Some of the more common ones include:

So in the upcoming months, review what benefits you have provided to your employees from 1 April 2011 to 31 March 2012. Have you got the appropriate records and declarations in place? If you are unsure if something is a fringe benefit, see your accountant. Taking advantage of the exemptions, concessions and choices available can help keep your employees happy and save on tax bills.

For more information visit www.grantthonton.com.au

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