When you are running a business, hiring staff is one of the basic requirements. And for keeping those employees, you are likely offering them some perks. If you agree with that and do the same, it is essential to get familiar with the FBT (Fringe benefits tax). These benefits cover whatever you pay to your staff apart from the monthly wages or salary.
What is Fringe Benefit?
You read the definition of FBT above. It covers things like:
- Discounted loans
- Cars (rented or owned by the company) that employees can use
- Arrangements for salary sacrifice
- Gym membership
- Accommodation or housing and LAFH (living away from home) allowances
- Reimbursing expenses like school fee
- Employees’ debt release
- Employees’ private expenses that the company has reimbursed or paid
However, this term excludes all those important work items such as protective clothing, tools, mobiles, and laptops.
When would a Fringe Benefits Tax is Applicable?
Vehicles like Cars: An electrician, a salesperson, or a business manager might be using the company’s vehicle for business travels. However, if the employee uses the vehicle for personal use (anything except for work) or on a non-working day, that would be covered under the fringe benefit.
Entertainment and Meals: Any expense on meals planned to sign contracts with potential clients or current customers falls under the fringe benefits tax definition.
When to Register for FBT?
Since you are clear about the term, you should register for it if you are offering any such benefit. However, using a trust (or another company) to run your business puts you on the list of employees. Any benefits you avail of in such a position would fall under the list of tax obligations.
This can go confusing if you don’t have complete knowledge. However, Sydney accounting services can help you calculate and file an accurate FBT return for business benefits.