The FBT, or fringe benefits tax, is another form of payment an employee can receive that isn’t a traditional wage or salary. According to Tony Greco, IPA senior tax advisor, the FBT “has that unsavoury aspect of being the most cumbersome of all taxes and the one that drives most employers the biggest compliance burden relative to the amount of money it generates.” In order to make a decision about the issue, it’s important to fully understand what it is and how it effects your taxes.
What is the FBT?
The fringe benefits tax (FBT) is another type of payment an employee can receive beyond their wages. This only applies to the actual employee and not their beneficiary in the event of their death. A “fringe benefit” can come in different forms and can be “paid” to future, present, and past employees. This includes non-monetary compensation like access to services, privileges, or rights. Some examples of a fringe benefit include:
- A paid gym membership
- A cheap loan
- Private use of a company vehicle
- Free ticks to events or concerts
- Salary sacrifice arrangements
- Reimbursement of non-work expenses like fees for school
Why Do Australians Want to Change the FBT?
There are numerous anomalies within the FBT that lead to unfair taxing situations. The reality is that, as employee benefits have changed, the FBT has stayed the same. The rules that fall under it are well overdue for an overhaul.
For example, some employers offer a salary sacrifice arrangement that includes a bus card for travel to and from work. Normally, bus transportation is considered private and not something you can receive tax relief for using. In this situation, the bus fare comes with a tax break under FBT, yet other forms of public transportation like ferries and trains do not.
Filing Your FBT
Always be careful when filing your FBT to ensure you are providing accurate information. Make sure you are aware of whether you have chosen a quarterly or yearly filing schedule and have all your information ready and organised. The most effective way to ensure that your FBT is filed properly is to do so with a professional. Bis Cosgrove is available to answer your tax questions and file your FBT the right way. Contact Brian today to learn more about how you could save money on your taxes this year and every year after.