Questions
- Each year when we lodge our FBT return, we are never sure if we have paid too much or paid too little?
- Which valuation method should I use?
- What exemptions or concessions can I claim?
- Will I be audited?
- Why is my FBT liability so high?
- Should I offer flexible salary packaging arrangements to employees?
- Can I claim the minor benefits exemption?
- Is my employee eligible to receive a Living Away From Home Allowance?
- We struggle to understand when an expense is an entertainment expense or a business expense?
- Are team building or team bonding activities subject to FBT?
- Should our people maintain travel diaries?
- Our employees do not complete their expense claims correctly and are always losing or not obtaining receipts / tax invoices?
- We regularly receive queries from our employees regarding the calculation of their reportable fringe benefits (RFB) amount. Upon further investigation we find errors and end up amending the FBT return.
- Each year we prepare our FBT return based on the prior year’s FBT return file. Is this an effective method for preparing the annual FBT return?
Answers
Roll over the questions...
This is a common question. We can help you identify the areas of concern and explain the basis on which your FBT liability has been calculated and paid.
Most fringe benefits, and certainly some of the key benefits like cars, car parking and meal entertainment, can be valued in a number of ways.
Depending on the valuation method used, this can significantly vary the amount of FBT payable and the documentation required.
The FBT legislation includes a large number of exemptions and concessions. These can significantly reduce your FBT liability.
The threat of audit always exists. It is important to understand when you may be exposed. It is also important to understand the ATO areas of focus.
If you believe that your FBT liability is too high, then we can help explain why and assist you in considering reduction mechanisms.
Salary packaging remains an attractive proposition for both employees and the employer. It is important to have the correct processes and policies in place to support salary packaging arrangements.
With the increased threshold to $300 (including GST), there has been increased awareness of this exemption. This is especially true when considering Christmas Parties and small gifts.
Care needs to be taken when claiming this exemption.
Before agreeing to pay a Living Away From Home Allowance (LAFHA), careful consideration is required of the employee’s personal circumstances.
With proper structuring, a LAFHA delivers significant tax benefits to the employee. A wide range of exemptions and concessions may apply to employees who are Living Away From Home or relocating, whether temporarily or permanently.
We strongly recommend that you request advice when considering payment of a LAFHA or relocating employees.
Often there is no tax distinction between an entertainment expense and a business expense. The tax implications of food and drink and entertainment expenses are complex and require careful consideration.
This question is usually asked “after the event” and in most cases after considering the facts, we respond that FBT does apply. With some upfront planning, the FBT cost may be minimised.
In certain circumstances travel diaries need to be maintained.
It is important to obtain the correct documentation for tax purposes. To support this requirement, it is necessary to have the rights policies and processes in place, coupled with the availability of adequate training.
Since the introduction of the reportable regime in 1999, many businesses have struggled with the practical and technical requirements. This can lead to unnecessary tension between the employer and employees (and sometimes ex-employees).
This is a commonly asked question and something we observe regularly. We can assist you in developing a more effective method in preparing your FBT return.