Unlocking Fringe Benefits Tax (FBT) for Australian Employers: 2024-25 Guide
Fringe Benefits Tax (FBT) can often feel complex and daunting for Australian employers, but understanding it is essential to ensure your business remains compliant and avoids costly penalties. This guide breaks down FBT, explaining how it works and what you need to know for the 2024-25 tax year.
What Is FBT? FBT is a tax paid by employers on certain benefits provided to employees, their families, or associates. These benefits, known as “fringe benefits,” can include anything from company cars to low-rate loans, entertainment, or gym memberships.
Key Changes for 2024-25 The 2024-25 tax year brings some updates to FBT rules that employers should be aware of, including:
- Exemptions for Electric Vehicles (EVs): If your business provides employees with electric vehicles, these may be exempt from FBT, provided the EV meets specific criteria.
- Car Parking Benefits: The threshold for exempt car parking benefits has increased, and it’s crucial to assess how this might impact your FBT obligations.
Common Fringe Benefits Some of the most common types of fringe benefits include:
- Car Benefits: If you provide an employee with a vehicle for private use, FBT applies.
- Loan Benefits: Offering low-rate or interest-free loans to employees is considered a fringe benefit.
- Expense Payments: Paying for employees’ personal expenses, such as school fees or rent, is subject to FBT.
- Entertainment: Providing entertainment, such as meals or tickets to events, can also attract FBT.
Calculating FBT To calculate FBT, you need to determine the taxable value of the benefit provided. This involves considering factors like the employee’s use of the benefit and whether any employee contributions were made.
The FBT rate for the 2024-25 tax year remains at 47%, and the gross-up rate depends on whether the benefit is subject to GST:
- Type 1 Benefits (GST credit available): Gross-up rate is 2.0802.
- Type 2 Benefits (GST credit not available): Gross-up rate is 1.8868.
Recordkeeping and Reporting Accurate recordkeeping is essential to comply with FBT requirements. Employers need to keep documentation that clearly outlines the benefits provided, their value, and any employee contributions. FBT returns are lodged annually, with payment due in May each FBT year.
- FBT calculations and lodgements
- FBT exemption advice
- Minimising FBT liability through tax planning
How Lowrys Can Help FBT compliance can be complex, but at Lowrys, we offer expert guidance to help you navigate these regulations smoothly. Our team can assist with:
Stay ahead of your FBT obligations with Lowrys by your side.
