We driven into motor vehicles, we’ve partied our way through entertainment, so what’s left? The true answer is lots but I won’t bore you forever. Instead, I’ll go through a few more highlights.
One often overlooked area of FBT is parking. Where an employer provides a parking space for the use of an employee, it may be subject to FBT. Specifically it will apply where an employer provides a parking space (either on premises or under a commercial arrangement) that is:
- Within 1 kilometre of a commercial parking station that charges a fee for all day parking.
- Car is parked for more than four hours between 7am and 7pm.
- The car is under the control of the employee or provided by the employer.
- The car is parked at the employee’s usual place of employment.
- The car is used to travel from home to work at least once on the day.
The conditions are quite broad and the key is the 1 kilometre radius.
Another large fringe benefits category are expense payments. This can be just about anything that you pay on behalf of your employees – school fees, mortgage, electricity, health insurance etc. It applies if you pay the expense directly to a third party as well as when you reimburse the employee for the expense. It will also relate to “in-house” expenses. For example, if are a manufacturer of furniture and you give an item to an employee, it will be subject to FBT.
If you pay for your employee’s home internet costs, this might also be subject to FBT, although the liability can be reduced through the “otherwise deductible” rule outlined below.
If you waive a debt or provide an employee with a loan at a reduced rate of interest (or no interest), it may be regarded as a loan fringe benefit. The value will be equal to the amount forgiven or in the case of a low interest loan, the difference between the commercial rate and the rate charged.
Other categories include housing, living away from home, airline transport, property and board fringe benefits.
Finally, there are residual benefits. These are a catch all for most other things which don’t fit into any other category. They include utes and motor cycles (because they aren’t cars); and the use of a property at a reduced rate.
It’s not all doom and gloom. There are a few exceptions. I’ve previously mentioned the minor (<$300) and infrequent exemption. This would apply to Christmas and birthday gifts for example.
There is also the “otherwise deductible” rule. This allows the value of any fringe benefit to be reduced to the extent that the employee would be eligible to claim a deduction. For example, if your employee has a rental property with an interest only mortgage. You would be able to pay the interest on their loan without incurring FBT. This is because if it had of been paid directly by the employee, it would have been deductible. This also applies to things such as professional subscriptions, laptops, mobile phones, mobile phone usage, etc. However, it only applies if it actually is deductible to the employee.
The reality is, if you provide a benefit to your employee and it isn’t business related, chances are FBT will apply. It can even apply if a third party (eg one of your suppliers) provides your employee with a benefit! However there are a number of ways to reduce or eliminate your FBT liability, so if in doubt, always talk to your accountant.
Need to sort your FBT ASAP? I offer a FREE 30 minute initial consultation. You can easily book online here and I look forward to helping you sort your finances!