What employers need to know about fringe benefits


On 31 March 2017, the Fringe Benefits Tax (FBT) year ends. With increased focus on data matching, the ATO will be reviewing whether employers who should be paying FBT are, and that they are paying the right amount.

To help you meet your fringe benefits obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:

  • Do I have to consider FBT?
  • What information do I need to give my accountant?
  • What is exempt from FBT?
  • How can I reduce my FBT liability?

These questions are all answered for you below, as well as some log book management tips.  Remember this advice is general in nature and we encourage you to discuss your specific circumstances with our accountants who are all trained in FBT matters.

1. FBT Rate change –  On 1 April 2017, the FBT rates will decrease to:

FBT Rate                       47%

Type 1 Gross Up Rate    2.0802

Type 2 Gross Up Rate    1.8868

2. Do I have to consider FBT?

Generally, if you have employees, including directors and you provide them with cars, car parking, entertainment (food and drink), employee discounts, reimburse private expenses etc, then you are likely to be providing a fringe benefit and we will need to give consideration to FBT.

It’s important you start gathering all of the details of these provided benefits as soon as possible using our annual FBT Questionnaire so we can calculate any potential FBT liability and lodge your FBT return on time if required – due 25 June 2017 with payment to be made by 28 May 2017.

3. What items are exempt from FBT? 

If you’re providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value, you are unlikely to have to worry about FBT.

You can fill out our short FBT Questionnaire to be 100% sure.

4. An easier way to manage your vehicle log books.

For employers with 20 or more ‘tools of trade’ cars – a car required for the job, like for a sales rep travelling extensively for the business – the ATO has a new process for validating the business use percentage of the car.

It’s called the ‘simplified method’, and if you meet the access conditions, you can apply an average business use percentage to all ‘tools of trade’ cars in your fleet for first log book year and the next 4 years. Conditions to be met are:

  • valid log books kept for at least 75% of the cars in the log book year;
  • the employer chose the make and model of the car, not the employee;
  • each fleet car has less value than the ‘luxury car’ limit when purchased, generally $64,132 in 2016/2017;
  • the cars aren’t provided under a salary packaging arrangement / employee remuneration package; and
  • your employees can’t choose to receive additional remuneration in lieu of using the cars.

5. Ways you can reduce your FBT liability.

Here are some ways in which you can reduce your FBT liability:

  • replace your fringe benefits with cash salary;
  • provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
  • look at providing benefits that are exempt from FBT; and
  • use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don’t reimburse them for. Though you should note that employee contributions may be deemed assessable income to you and subject to GST.

How we can help you.

The FBT year ends on 31 March 2017, so be sure to complete and return the FBT Questionnaire as soon as possible so you don’t miss the lodgment date of 25 June 2017, and meet the payment due date of 28 May 2017.

We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability or creating effective salary sacrifice arrangements.

 Call us today on (03) 9744 7144.


Avoid these common mistakes to keep your business on track

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From managing to marketing and everything in between, the world of small business can be both exciting and overwhelming. When you first start up, you have dreams of making the big time. But as time goes on, you may discover that although you have the passion, the energy runs out quickly when each day provides the next challenge.

Don’t let these common mistakes keep you down. Avoid them, and get your business back on track.

Failing to plan – The saying is true: If you fail to plan, you plan to fail. This is a big problem for many small businesses. If you don’t have goals and specific plans on how to get the business where it needs to be, you will be distracted by every detour along the road and your business may end up nowhere near the ultimate destination. Spend a day at the beginning of each year setting out your goals and plans — it doesn’t have to be pages long. In fact, try to put your goals on one page and pin it above your desk so you can refer to it regularly.

Not understanding cash flow – Remember, cash is king. Every business fails when they run out of cash. Most business owners focus on sales and profits, but cash flow is critical to the success of your business. Many profitable business still struggle with cash flow. You need to understand the difference between profit and cash, and focus on ensuring you have adequate reserves to cover the unexpected.

Believing “build it and they will come” – Don’t listen to those who say, “build it and they will come.” Of course we believe in our product or service offer to customers. Just because we feel that we have the answer to the customers’ problems does not necessarily mean they are aware of their problem — or know you have the solution. It takes more than simply opening a business to guarantee sales will happen. You need to stay on your marketing toes at all times to keep a steady stream of customers visiting your business.

Putting garbage in — and expecting to understand it later – If you put garbage in, you will get garbage out. Many small businesses use spreadsheets to keep their financial, customer and key business records. Although this might suffice at the beginning, once the business is up and running, you need specialist software that will ensure all the information you record is correct and accurate. Spreadsheets are prone to errors. There are no built-in controls over the information entered, and spreadsheets will not provide critical information in a decision-making format without an enormous amount of time and effort. Use tools that are designed for record keeping and deliver reports and key performance measures on demand — it will make your life easier and improve your business.

Have you established a solid team? – If you are going to be successful, you’re going to need a team of people to make it happen.  You are an expert in your field, and that is why you decided to start your own business, right?   Well what about other areas of the business, where specialised skills are also needed?  By putting together a team of professionals, that have the skills to benefit your business, you will give your business a higher chance of survival.

Are you thinking of starting your own business?  Cementing the right foundation from the start can help you avoid these common mistakes. We have over 27 years experience working with small business.  Success stories come from when businesses have a very clear plan from the start.  We can help you with your business plan.

Register now for our FREE small business workshops.  Held the first Tuesday of every month in The McMahon Osborne Group Boardroom, at 5.30pm.

First workshop is Tuesday 7th March 2017, at 5,30pm.

To register click on the link below


General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.