Often overlooked, certainly misunderstood, Fringe Benefits Tax is a beast unto itself, separate to and outside the income tax we are all so familiar with.
Fringe Benefits Tax applies to the provision of non-cash benefits to employees and/or their associated.
If instead of paying an employee cash (wages, salary, commission, etc) which they would obviously pay tax on, you decide to give them a non-cash benefit (a holiday or you pay their health insurance, etc) then YOU as the employer pay tax on the value of that non-cash benefit!
The most common form of fringe benefit is, of course, the provision of a motor vehicle and/or the payment of car expenses.
And this includes motor vehicles you and your family use that are owned by the business!
A Fringe Benefits Tax Return is a completely separate tax return to your normal Income Tax Return.
The Fringe Benefits Tax (“FBT”) year also runs on a different time frame to Income Tax and the normal financial year.
Don’t be caught out by the ATO failing to meet your FBT obligations. When it finally happens the tax debt, plus penalties, plus interest, could be crippling. So make sure you seek advice about what items in your business are caught and then ensure your reporting and payment of FBT is managed as required.
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