March 31 marks the end of the 2024-25 Fringe Benefits Tax (FBT) year, meaning that it is time for businesses to review their obligations and prepare for lodgement.
FBT requirements can be confusing, and many businesses unknowingly provide fringe benefits without realising the extent of their liabilities.
What is Fringe Benefits Tax
FBT is an employers tax payable on certain non-cash benefits provided to employees. This is not inclusive of wages and salaries. FBT is calculated separately from income tax, with the FBT year running from April 1 to March 31. Businesses must lodge and pay their FBT by 21 May, unless utilising a registered tax agent, in which case the due date can be extended to June 25.
Many businesses operate under the assumption that they have no FBT liability. Even if no FBT is payable, it is still advisable for businesses to lodge a nil return statement to avoid further scrutiny and potential audits from the ATO.
Taxable benefits
Some of the most common benefits that are payable under FBT are:
- Personal use of company vehicles.
- Private health insurance.
- Leased vehicles for personal use, such as novated lease agreements.
- Gym memberships.
- Entertainment expenses – Food, accommodation, tickets.
- Discounted loans or reimbursements.
- Living away from home allowances.
- Childcare costs and school fees.
Lodging FBT
An employer lodging FBT must:
- Review and identify all types of fringe benefits they provide
- Check for FBT concessions and exemptions – Identify possible ways to reduce FBT
- Maintain detailed recordkeeping – track all expenses.
- Calculate total FBT liability
- Lodge and Pay FBT
Common Mistakes
Many businesses struggle with their FBT obligations. A few of the most common mistakes include:
- Improper entertainment expense tracking
- Incorrectly claiming work-related exemptions
- Poor record-keeping
- Missing the FBT deadline
With the end of the 2024-25 Fringe Benefits Tax year fast approaching, now is the time for business owners to revise their obligations and ensure they don’t fall into the typical traps. For businesses who are unsure of their FBT obligations, it is imperative to engage with an accountant early to ensure that FBT lodgement is efficient and effective.
If you’re unsure of your FBT obligations or you need help with lodgement, Optima Partners team of experienced tax accountants can help.
Contact us today to find the right solutions for your business.
