FBT - What You Need to Know in 2012

Written on the 8 May 2012

The FBT year runs from 1 April to 31 March.  FBT is one of those areas that many employers struggle with; not because the tax is complex but because of the level of detail required to fulfil your obligations.

How do I know if I need to pay FBT?

If you are not sure whether you are providing fringe benefits to your employees, here are some key questions you should ask yourself:

• Do you make vehicles owned by the business available to employees for private use?
• Do you provide loans at reduced interest rates to employees?
• Have you released an employee from a debt they owed?
• Have you paid for, or reimbursed, an expense incurred by an employee?
• Do you provide a house or unit of accommodation to your employees?
• Do you provide employees with living-away-from-home allowances?
• Do you provide entertainment by way of food, drink or recreation to your employees?
• Do any of your employees have a salary package arrangement in place?
• Have you provided your employees with goods at a lower price than they are normally sold to the public?

A common area of confusion is motor vehicles. Where a motor vehicle owned or leased by the business is used by an employee for private purposes, then FBT is an issue that needs to be managed.  Once again, the Tax Office will be specifically targeting motor vehicles which are owned by businesses so it will be important for us to identify any potential FBT issues before the Tax Office does. 

Another common area of confusion is entertainment.  Entertainment can be almost anything from food, drink, recreation such as movie tickets, to non-work based travel.  If you provided any entertainment benefit to employees, such as an employee attending a business lunch, then FBT applies.  Entertainment is an area of continued focus for the Tax Office as the FBT treatment also interacts with the treatment of these expenses for income tax and GST purposes.

What is exempt from FBT?

Certain benefits are excluded from the scope of the FBT rules. The following work related items are exempt from FBT if they are provided primarily for use in the employee’s employment:

• Portable electronic devices (e.g. laptop, tablet, mobile, PDA, electronic diary, notebook computer, GPS navigation device) that are provided primarily for use in the employee’s employment (limited to the purchase or reimbursement of one portable electronic device for each employee per FBT year);
• An item of computer software;
• Protective clothing required for the employee’s job;
• A briefcase;
• A calculator;
• A tool of trade.