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Fringe Benefits Tax (FBT) - What Employers and Employees Need to Know



As the Fringe Benefits Tax (FBT) year ends on 31 March, it's essential to be aware of the updates and problem areas for employers and employees. This article highlights the crucial FBT issues and what you need to know.


FBT Exemption for Electric Cars

To encourage Australians to shift to electric cars, the government has passed legislation providing an FBT exemption for certain low or no emissions vehicles from 1 July 2022. If the value of the car is below the luxury car tax threshold for fuel-efficient vehicles and the car is first held and used on or after 1 July 2022, your team members can potentially qualify for an FBT exemption.


FBT and Work from Home Arrangements

Due to the pandemic, many workplaces have shifted from fully remote to a combination of remote and in-office work. Employers who have provided employees with work-related items such as laptops and mobile phones shouldn't trigger an FBT liability as long as they are primarily used for work purposes. If an FBT exemption isn't available, it's worth considering whether the FBT liability on these items could be reduced by the employee purchasing the item themselves and claiming a once-only deduction in their personal return.


More Workplaces Caught by Car Parking Changes

A recent ruling by the ATO has expanded the scope of the FBT rules dealing with car parking benefits. This means that more employers will be considered to be providing car parking benefits to staff. The definition of what constitutes a commercial parking station has been expanded to include parking stations that charge penalty rates for all-day parking to the public. If an employer provides car parking facilities for employees within 1km of a commercial parking station, and that commercial car park charges more than the car parking threshold, a taxable car parking fringe benefit will normally arise unless the employer is a small business and able to access the car parking exemption.


Mismatched Information for Entertainment Claimed as a Deduction and What is Reported for FBT Purposes

Mismatched information can create problems for employers. For example, when it comes to entertainment, expenses such as a meal in a restaurant are generally not deductible, and no GST credits can be claimed unless the expenses are subject to FBT. If a business uses the 'actual' method for FBT purposes, there should not be any FBT implications if the value of the benefits provided to employees is less than $300. If the business uses the 50/50 method, then 50% of the meal entertainment expenses would be subject to FBT.


In conclusion, as the FBT year comes to an end, it's important to understand the updates and problem areas for employers and employees. By being aware of these issues, you can ensure that you comply with the FBT rules and regulations.

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