As we say goodbye to summer and welcome some cooler weather, tax time is heating up as we near the end of the Fringe Benefits Tax (FBT) year.
The 2023 FBT year ends on 31 March 2023, so now is a good time to begin thinking about your FBT obligations.
As an employer you must assess the amount of fringe benefits tax you have to pay for fringe benefits you have provided to your employees or their associates between 1 April 2022 and 31 March 2023.
The most common types of fringe benefits include:
- Motor Vehicles – a company vehicle available for personal use
- Car Parking
- Gym & Health memberships
- Private Health Insurance
- Entertainment, such as free tickets to concerts, and
- Childcare Costs or School Fees
This list isn’t comprehensive, and more information can be obtained from the ATO website.
How you work out the taxable value of a fringe benefit varies according to the type of benefit. A gym membership for example would require you to ‘gross-up’ the taxable value of the benefit provided. This is equivalent to the gross income your employee would have to earn, at the highest marginal tax rate (including Medicare levy) to buy the benefit themselves.
The FBT you pay is 47% of this ‘grossed up’ value of the fringe benefits.
Frank runs a business and provides his employee Sam with a gym membership which costs $1,100 including GST. This is a fringe benefit and is calculated as follows:
Taxable Value of the benefit $1,100
X the gross up rate (for GST inclusive fringe benefits the rate is 2.0802)
X the FBT rate (47%)
= FBT of $1,075.46
Frank would then, prepare and lodge an annual FBT return and pay his FBT liability to the ATO.
If you don’t need to lodge an FBT return and are registered for FBT you are still required to report to the ATO by the date your return would have been due. For the 2023 year this is on 21 May 2023.