April marked a new Fringe Benefits Tax (FBT) year – and with the new year comes new rules and rates that apply to your business if you take advantage of fringe benefits for your employees.
If you are a new business, or are looking for incentives for employees, fringe benefits are important in a business in attracting quality staff, and thus ensuring a quality work environment. FBT is a tax payable by employers for benefits paid to an employee in place of salary or wages.
Some of the most common benefits that are offered to employees include:
- Use of vehicle for personal as well as business
- Car parking
- Entertainment
- Housing or board
- Living away from home allowance
- Salary packaging
Review Salary Packaging Agreements
Since the beginning of the new FBT year, the rate is now down to 47%, from 49% the previous 2017 year. With this change in rate, it may be worth reviewing all salary packaging agreements.
Overall, the rate change should make fringe benefits more attractive. However, concessions for certain meal and entertainment fringe benefits have been removed.
Logging Road Travel
It is important that with the new year, your log book is up-to-date to ensure a fresh start to the new FBT year. However, tracking the number of kilometres travelled – and constantly taking away from that number the kilometres used for personal use – can be tedious.
The ATO has introduced a simpler process for businesses with 20 or more “tools of trade” cars, used extensively for business purposes that could potentially apply an average business use percentage across the fleet for 5 years (assuming key details stay the same). Of course, there is a
list of conditions you must meet in order to qualify; if you are unsure, our Business Services team is here to assist.
If your fleet is smaller, or the cars are used for business as well as pleasure, it may be worth downloading a distance tracking app to your personal device. There are a number of these on the market, many of them free. Just ensure the application is ATO compliant to ensure ease of data transfer. A good logbook application will use GPS to record all journeys, remember your odometer reading from the previous trip, and some even save designated trips as favourites.
Organise now, worry less
With the new year underway, it is important to put your best foot forward. Simply put, this can be done through preparing the necessary information to avoid unnecessary stress and last-minute decisions. Taking the time at the beginning of the year to ensure all steps are put in place to record all information necessary ensures stress levels to stay low, as well as the information lodged to the ATO is as accurate as possible.
To discuss your FBT options and set-up further, contact our Business Services team to find out more.