Leenane Templeton – Newcastle Business Accountants, Business Advisors & Financial Planners

Tag: Fringe Benefits Tax

  • FBT Preparation (What You Need To Do Before 31 March)

    FBT Preparation (What You Need To Do Before 31 March)

    As 31 March approaches, businesses need to prepare for their Fringe Benefits Tax (FBT) obligations to ensure compliance with the Australian Taxation Office (ATO).

    The FBT year runs from 1 April to 31 March, and preparing ahead of time can help businesses avoid costly mistakes, reduce their FBT liability, and ensure all required records are in place.

    Whether you’re providing company cars, entertainment benefits, or employee loans, here’s what you need to do before the FBT year-end.

    1. Review Your Fringe Benefits

    A fringe benefit is any non-cash benefit provided to employees (or their associates, such as family members) in connection with their employment. Some common types of fringe benefits include:

    • Company cars used for private purposes
    • Entertainment expenses, such as meals, tickets, and events
    • Employee loans with low or no interest
    • Salary packaging arrangements
    • Housing benefits or rent assistance

    What You Should Do: Identify all fringe benefits provided during the FBT year and determine their taxable value.

    2. Ensure Accurate Record-Keeping

    The ATO requires businesses to keep proper records to support FBT calculations. Before 31 March, make sure you have:

    • Logbooks for company vehicles (if using the operating cost method)
    • Receipts and invoices for entertainment expenses
    • Employee declarations (e.g., if employees make contributions towards benefits)
    • Documentation for salary sacrifice arrangements

    What You Should Do: Double-check that all required records are complete and up to date.

    3. Assess the Taxable Value of Benefits

    The value of fringe benefits can be calculated using different methods, depending on the type of benefit. Some benefits have specific valuation rules, while others allow businesses to choose between methods.

    For example:

    • Company cars: Use either the statutory method (based on a percentage of the car’s cost) or the operating cost method (based on actual running costs and business use percentage).
    • Entertainment: The actual cost method or 50/50 split method can be used.
    • Loans to employees: Interest rates should be compared to the benchmark interest rate set by the ATO.

    What You Should Do: Determine the best valuation method for each benefit to minimise your FBT liability.

    4. Consider Employee Contributions

    Employees can reduce the FBT liability on certain benefits by making post-tax contributions. For example, if an employee reimburses the business for private car use, the taxable value of the benefit is reduced.

    What You Should Do: If applicable, ensure employee contributions are processed before 31 March and properly documented.

    5. Identify Available FBT Exemptions & Reductions

    Some benefits are exempt from FBT or receive concessional treatment, including:

    • Work-related items such as laptops, phones, and tablets
    • Public transport or parking benefits under certain conditions
    • Benefits provided to employees of not-for-profit organisations (which may have FBT concessions)

    Additionally, small businesses (with turnover under $50 million) can access exemptions on certain work-related portable devices.

    What You Should Do: Review whether your business qualifies for any exemptions or reductions to lower your FBT liability.

    6. Prepare for Lodgement and Payment

    The FBT return is due by 21 May 2025 if lodged manually, or by 25 June 2025 if lodged electronically through a tax agent. Any FBT payable should be accounted for in your business’s financial planning.

    What You Should Do: If your business has an FBT liability, prepare to lodge the return on time and set aside funds for payment.

    Preparing for FBT before 31 March ensures compliance, reduces tax liabilities, and prevents last-minute stress. Businesses can effectively manage their FBT obligations by reviewing fringe benefits, keeping accurate records, considering valuation methods, and identifying exemptions.

    If you need help assessing your FBT liability or preparing your FBT return, contact a professional accountant to ensure you’re meeting all requirements while minimising costs.

    We’re here to help – find out how.

  • FBT, The Holiday Season & Your Employees

    FBT, The Holiday Season & Your Employees

    At the end of the year, you may be looking for extrinsic ways to thank your hardworking employees or faithful customers/clients.

    A work Christmas/end-of-year party may be a method employed by many businesses to demonstrate their gratitude towards staff, but the expense can be a deciding factor.

    Christmas/holiday parties are regarded as “entertainment” expenditures, which means they are not tax-deductible. The employer may have to pay FBT if the party costs $300 or more per person.

    It may also be that an end-of-year party might not be feasible for your business this year.
    Instead, it may be a better idea to thank your staff by giving certain items known as “non-entertainment” gifts. These non-entertainment gifts must cost less than $299.99 but are fully tax-deductible and carry no FBT.

    Non-entertainment gifts are usually exempt from FBT when the total cost of the gift is less than $299.99 (inclusive of GST). An employer can also claim tax deductions and GST credits for every non-entertainment gift to staff members.

    These gifts could include beauty or skincare products, flowers, wine, gift vouchers or hampers.

    If you provide a similar gift to the spouse/partner of an employee, the FBT exemption will also be valid. This can be a nice way to say thank you to the hard-working members of your staff while promoting a positive work culture.

    Providing your employees with gifts considered to be “non-entertainment gifts” but costing $300 or more (including GST) is less tax effective. Even though the gift giver can still claim a tax deduction and GST credit, FBT must be paid at 49%.

    You can still give staff members entertainment gifts as a way of saying thank you, though this is a less beneficial and tax-favourable option from an employer’s point of view.

    Examples of entertainment gifts include tickets to a play, sports event, musical, theatre or even providing a holiday.

    These gifts may not be FBT payable if they cost less than $299.99 (including GST) or claimable for a tax deduction or GST credit. However, if they cost more than $300 (including GST), an employer can claim a tax deduction and GST credit, but FBT is payable at 49%.

    Some fringe benefits (such as these gifts) may need to be included in payment summaries. When the value of certain fringe benefits amounts to more than $2,000 in an FBT year, it is your responsibility to record that amount in your payment summary.

    Want to know more about possible FBT exemptions that might apply to gifts you give to your employees this holiday season? Speak with us about how you can make this work for your situation.

    Chat with your accountant at LT

    Disclaimer:

    The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.


  • How to keep your Christmas party tax-free

    How to keep your Christmas party tax-free

    Throwing a Christmas party for your staff can be a great way to show appreciation and have some fun, but tax implications of a party can be surprising and costly.

    Before hosting a staff Christmas party, employers should be aware that the majority of the time, a party would be considered ‘entertainment’ and is therefore not tax deductible. Depending on the nature of the event you may have to pay fringe benefits tax (FBT), which is a tax that applies when an employer provides a benefit other than a regular wage or salary to their employees.

    Luckily, there are some exemptions of FBT that could save your business some money. Minor benefits are provided to employees on infrequent occasions for expenses of $300 or under, so limiting the cost to $300 per head at your party will keep things tax-free.

    For taxation purposes, the party would be considered ‘entertainment’ if it was held at a venue such as a restaurant, cafe, theatre, or nightclub. Tax can be avoided by hosting the party on business premises on a working day.

    Having the party guest list restricted to current employees can keep the event FBT free. If employees bring an associate, they can still be exempt from FBT given that the cost of the employee’s guest does not exceed $300, inclusive of GST. If the cost is more than $300, FBT is applicable on the associate’s portion of food and drink, however, a tax deduction and GST credit can be claimed. FBT does not apply to the cost of clients attending the Christmas party, however, their portion of the cost cannot be claimed as an income tax deduction or GST credit.

    Another option to consider when dealing with FBT paperwork is the 50-50 split method, where the Christmas party would be subject to an FBT liability of 50% of the total cost, making it tax deductible. The other 50% of costs would be non-deductible irrespective of whether it was provided to employees or their associates.

    For advice with your business contact Leenane Templeton Chartered Accountants & Business Advisors.

    This article is for guidance only, and professional advice should be obtained before acting on any information contained herein. Leenane Templeton do not accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

  • It’s FBT Time

    It’s FBT Time

    It’s Fringe Benefits Tax Time

    The end of the FBT year is fast approaching, and it is a good time to reflect on your FBT plans for 2019-20.

    Fringe benefits are benefits that you provide to your staff that fall outside the categories of traditional wages and salaries. Examples of common fringe benefits include cars, low interest or interest-free loans and school fees.

    Fringe benefits are taxed differently to income, and business owners should be aware of the relevant compliance issues when negotiating salary packages.  The benefits are not subject to income tax. However, the employer must pay fringe benefits tax (FBT). Typically, the employer will reduce the employee’s salary by the amount equivalent to the FBT incurred.
    The FBT rate for the year ending 31 March 2018 and 2019 is 47%.

    It is advisable to seek professional guidance before entering into a new salary packaging agreement with an employee. The reason for this is that the calculations surrounding FBT calculations are extremely complex, and you may end up inadvertently disadvantaging them in the process, thereby defeating the purpose of salary packaging.

    Read More about our Fringe Benefits Tax services

    Contact our FBT accountants today.

    Call: 02 4926 2300