Fringe Benefit Tax 2018
It’s that time of year again. Time to ensure you are ready to lodge your fringe benefit tax for 2018. A fringe benefit is generally a non-cash benefit received by employees from their employers. It is provided to employees in respect of their employment. A fringe benefit is not subject to income tax in the hands of the employee. Fringe Benefits Tax (FBT) is paid by the employer on certain benefits they provide to employees or the employees’ associates. It is calculated based on the taxable value of the fringe benefit. The FBT year starts on the 1st April and ends on the 31st March each year and needs to be lodged with the ATO by 21st May 2018.
Changes have been made to the FBT for the 2018 year. The FBT rate has reduced from 49% to 47%. The Not-for-profit capping threshold has also changed in the 2018 year from $31,177 to $30,000 for Public Benevolent Institutions and $17,667 to $17,000 for Public and Not-for-profit Hospitals.
Some examples of fringe benefits that can be provided to employees include car fringe benefits, car parking, entertainment, expense payments and loans.
The most common fringe benefit is providing a company car to an employee for business and private use.
There are two ways of calculating FBT on a motor vehicle – one is by using the 20% statutory flat rate and the other is the log book method which can sometimes be a better option.
To ensure a log book meets the ATO requirements it must contain:
1. The date of the business trip commences and the opening odometer reading
2. The date the business trip concludes and the closing odometer reading
3. The number of the business kilometres travelled
4. The purpose of the journey with details of the trip
5. The make, model and registration number of the vehicle
When it comes to FBT for motor vehicles, you must remember to keep a declaration on file stating the opening and closing odometer reading during the FBT year.
Other recordkeeping requirements the ATO require are how you calculated the taxable value of the benefits, employee declarations, lease agreements, invoices, receipts and travel diaries. The ATO requires all records to be written in English and if stored electronically, must be in a form that is readily accessible if requested.
These records must be kept for 5 years from the date they are prepared, obtained or the transactions completed or the date your FBT return was lodged.
To understand more about fringe benefits tax, the ATO Website has numerous fact sheets. Alternatively, you can call our office and speak to an accountant for more information.
The Money Edge | Bundaberg