Fringe benefits tax 2019: What you need to know

Article by Jessica Redfern

 

Fringe benefits tax (FBT) is a tax imposed on employers who provide certain fringe benefits to employees and their associates in respect of employment. An employee can be a current, future or past employee.

The FBT year runs from 1 April to 31 March. If you provided fringe benefits during this period, you may be required to lodge a FBT return. Here’s what you need to know about FBT and your record-keeping obligations for the year ending 31 March 2019.

2019 FBT update

The conclusion of the 2% temporary budget repair levy brought a reduction in FBT rates in the 2018 FBT year. The 2018 FBT tax rate and gross-up rates have been continued for the 2019 FBT year.

FBT yearFBT rateType 1 gross-up rateType 2 gross-up rate
2019 47% 2.0802 1.8868
2018 47% 2.0802 1.8868
2017 49% 2.1463 1.9608

Reporting obligations

Fringe benefits tax return

You must lodge an FBT return if you have a liability during the FBT year. The return must be lodged, and tax paid, prior to 21 May. A tax agent lodgment concession applies, extending the return lodgment date to 25 June and the due date for payment to 28 May (when lodging electronically).

If you are registered for FBT and your fringe benefits taxable amount during the relevant FBT year is nil, you need to lodge a notice of non-lodgment with the Australian Taxation Office (ATO).

Reportable fringe benefits

If you provide certain fringe benefits with a taxable value greater than $2,000 in the 2019 FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee’s payment summary for the corresponding income year. Reportable fringe benefits are grossed-up using the lower gross-up rate.

Fringe benefits that are not required to be reported on a payment summary include:

  • car parking fringe benefits
  • remote area housing assistance, home ownership schemes, and repurchase schemes
  • if you live in a remote area, costs of occasional travel to a major Australian population centre
  • benefits you receive to ensure your security and personal safety because of your job
  • meal entertainment and entertainment facility leasing benefits, where these benefits are not provided under a salary sacrifice arrangement
  • emergency or other essential health care you receive as an Australian citizen or permanent resident while you are working outside Australia and you cannot claim a Medicare benefit
  • car benefits coming from your private use of pooled or shared cars
  • certain benefits provided to you if you are a:
    • Defence Force member
    • police officer

Record-keeping obligations

You must maintain sufficient records to enable your FBT liability to be assessed. All records must be written in English and maintained for five years. Records must be held in order to take advantage of exemptions and concessions to reduce the FBT you need to pay. You can read more on record-keeping requirements for specific fringe benefits in Chapter 4 of Fringe benefits tax – a guide for employers on the ATO website.

Mind the trap

If an associate of yours provides a fringe benefit to an employee of yours, you may be liable for FBT.  Your associate is required to provide you with copies of records detailing the fringe benefit provided within 21 days from the end of the FBT year. Both you and your associate are required to keep the records for five years.

Reducing your FBT liability

How do you reduce your FBT liability? Chapter 1 of Fringe benefits tax – a guide for employers lists four methods:

  • Replace fringe benefits with cash salary.
  • Provide benefits that are exempt from FBT.
  • Provide tax deductible benefits (in the hands of the employee).
  • Use employee contributions.

To discuss your 2019 FBT liability, contact the SRJ Walker Wayland team.