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FBT Penalties

How TMS Financials Can Assist with Fringe Benefits Tax (FBT)

At TMS Financials, we understand the complexities of managing Fringe Benefits Tax (FBT) and its implications for your business. Our expertise lies in simplifying FBT management to ensure compliance and maximise the benefits for both you and your employees. Here’s how we can assist you with your FBT needs:

Evaluating Your FBT Obligations

We’ll start by determining whether your business is required to pay FBT, considering the types of benefits provided, such as company cars, school fees, or employee entertainment. Understanding the taxable value of these fringe benefits is crucial in calculating your tax liability accurately.

Strategic Advice on Managing and Reporting FBT

Our team will guide you through the intricacies of FBT, including how to utilise exemptions and concessions effectively. Whether it’s advice on minor benefits, car fringe benefits using the statutory formula method, or salary sacrifice arrangements, we ensure that you leverage these options to minimise FBT liability while complying with Australian Taxation Office (ATO) regulations.

Compliance and Lodgement Support

We will assist you in keeping accurate records of benefits provided and their respective taxable values. Our support extends to preparing and lodging your FBT returns on time via the ATO Business Portal, ensuring that all reportable fringe benefits are accurately documented to avoid penalties and discrepancies.

Lodge your FBT with TMS Financials

Our team at TMS Financials specialises in providing personalised tax solutions tailored to your unique situation. We can help you navigate through the complexities of tax planning, identify the most effective strategies for your situation, and ensure you maximise your tax savings.

We’re an Australian tax accounting firm with 30+ years of experience serving business owners and investors. Our reputation for reliability and exceptional client service is built on providing accurate financial advice and asset protection. We remain committed to serving our clients with integrity, professionalism, and quality, and have the expertise to help you succeed.

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We are a Sydney based tax accounting firm servicing clients Australia wide online since 1993
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Principal of TMS Financials

We strive to build long-term relationships with our clients and to be a trusted advisor for all their financial needs.

Fringe Benefits Tax (FBT) benefits for your business

There’s a saying in business that your employees are your key asset. In today’s competitive job market, offering perks can significantly impact your ability to attract and retain talent.

Consider the following potential fringe benefits you can provide to your employees:

  • Offering car parking facilities
  • Covering the cost of an employee’s gym membership
  • Providing entertainment through complimentary tickets to events like concerts
  • Reimbursing expenses such as school fees incurred by your employees
  • Offering discounted loans to employees
  • Providing benefits through a salary sacrifice arrangement
FBT is a tax that employers must pay on specific benefits provided to their employees or their employees’ associates. It operates separately from income tax and is calculated based on the taxable value of these fringe benefits.

As an employer, it’s crucial to assess your FBT obligations for the FBT year, which runs from 1 April to 31 March. If you’re liable for FBT, you’re required to submit an FBT declaration and settle any owed amounts promptly. Understanding and managing FBT can contribute positively to your business’s financial health and employee satisfaction.

Meeting

Do I need to lodge an FBT return?

When you offer benefits to your team, like work cars or health cover, you might need to deal with Fringe Benefits Tax (FBT). This depends on if these benefits count as taxable fringe benefits and what their total taxable value is, which is what the benefits cost you less any amount your employee contributes towards the benefit.

Some benefits, like work tools or small benefits under $300, don’t need an FBT return. Getting advice from a tax expert can help make sure you comply with the ATO’s rules around Fringe Benefits Tax.

Lodge your FBT

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Penalties for late-lodgement and non-lodgement of FBT

Failure to lodge on time (FTL) penalty

If you’re late lodging your FBT return, you could be hit with a penalty of $222 for every 28-day period that passes, maxing out at $1,110 per return.

Administrative penalties

You might also face extra penalties for not following FBT rules properly, such as failing to keep the right records, submitting false or misleading information, or not providing your employees with their payment summaries.

General Interest Charge (GIC)

For any FBT you owe but haven’t paid by the due date, the ATO will charge you interest. This interest, known as the GIC, accumulates until you pay off the full amount. The rate for this is updated by the ATO every quarter.

Prosecution

In extreme cases, where there’s serious non-compliance or fraud involved, criminal charges could be brought against the business owner or the person responsible.

It’s important for employers to be aware of and adhere to their FBT responsibilities, ensuring all reports and payments are made in time to avoid these penalties and charges.

Disclaimer

The information provided in this article is for general guidance purposes only and should not be considered as personalised tax advice. It is recommended to consult with a qualified tax professional to assess your specific situation and determine the most suitable tax planning strategies for your needs. 

Offering fringe benefits to your employees

Offering fringe benefits, like company cars or health benefits, to your team can have notable tax effects for both you as the business owner and your employees.

Key tax considerations include:

Income tax

When you provide benefits, like work vehicles or health plans to your team, these are often seen as taxable income for them and need to be included in their tax returns. The value of these benefits gets added to their other income and is taxed according to their tax rate. However, some benefits, like small benefits under a certain value or specific exempt benefits, might not be taxed this way.

Reportable fringe benefits
If your team member gets fringe benefits worth $2,000 or more in value over the FBT year, you need to list this total on their payment summary. This reported amount on the payment summary is then considered when figuring out income-tested government support, like family tax benefits and child support.
Grossing-up
When calculating your FBT liability, the taxable value of certain benefits must be increased, or “grossed-up,” by a set factor. This ensures the FBT is calculated on the highest marginal tax rate, applied to the grossed-up taxable value of the benefit, rather than the actual cost to you as the employer. The specific gross-up rate used depends on the type of benefit provided.
Income tax

When you provide benefits, like work vehicles or health plans to your team, these are often seen as taxable income for them and need to be included in their tax returns. The value of these benefits gets added to their other income and is taxed according to their tax rate. However, some benefits, like small benefits under a certain value or specific exempt benefits, might not be taxed this way.

Exempt benefits
Certain types of fringe benefits, like work-related items or benefits given to employees with an income under $18,200 annually, might not be subject to FBT. These exempt benefits can include necessary tools or equipment for the job, highlighting the importance of understanding which benefits qualify to ensure compliance with FBT regulations.
Salary sacrifice arrangements
Employees can opt for fringe benefits, like company vehicles or superannuation contributions, through a salary sacrifice agreement with their employer. This setup lets employees enjoy these benefits using pre-tax income, potentially leading to tax advantages for both the employee and the employer. Understanding how these arrangements work and their impact on FBT and income tax is crucial for effective tax planning and compliance.
Offering fringe benefits
When you offer fringe benefits to your team, it’s essential to know your FBT responsibilities. This means checking if the benefit qualifies for an exemption or using the correct gross-up rate to figure out the FBT you owe. Understanding these rules helps ensure you meet your tax obligations while providing valuable benefits to your employees.
Benefits for an employee's associate
When you provide a fringe benefit to someone close to an employee, like their partner or child, the value of this benefit usually counts as part of the employee’s taxable income. It’s important for both employers and employees to understand how these benefits are taxed to make sure everyone follows the tax rules.

Contact us today for a consultation.

Contact us today to learn more about how our accounting services can benefit your business. We look forward to hearing from you and helping you achieve financial success!

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