A key HR practice is providing benefits for your employees to ensure employee satisfaction is maintained. However you should always talk to your Accountant about the benefits you provide to your employees to ensure that they are not subject to Fringe benefits tax (FBT).
Fringe benefits tax is a tax paid by employers on certain benefits provided to employees (including employees’ family or other associates). This benefit can be in addition to, or a part of, their salary or wages package.
Company director’s benefits received mTaxay also be subject to FBT.
The private use of a motor vehicle (including taxi’s that are not hired) is relieved from all FBT if all of the following conditions are met:
- The vehicle is a panel van, utility or other commercial vehicle (and the vehicle is not designed to carry passengers)
- The employee’s personal use of the vehicle is limited to:
- Travel between home and the workplace
- The travel is required in the duties of employment
- Non-work related use is irregular, minor and infrequent
The usage requirements are not met if:
- The vehicle is a car, the usage exceeds the above limitations and the cost operating method is used.
This means that the use of the car is a fringe benefit and all private travel (including the use between work and home) is taken into account when determining the percentage of personal and business use.
It should also be noted that if there is no logbook maintained the percentage of personal use is calculated to be 100%.
- The vehicle is a car, the usage exceeds the above limitations and the statutory formula method is used.
This means that the use of the car is a fringe benefit and all private travel (including the use between work and home) is taken into account when determining if the car was used or available for the private use of the employee.
- The vehicle is not a car and the usage exceeds the above limitations.
The employee’s use of the vehicle is a residual fringe benefit.
Other types of Fringe benefits include:
- Low interest loans for private expenses
- Payment of private expenses
- Some types of entertainment (for example meals where the employee is not required to stay overnight)
- Other benefits if the cost exceeds certain thresholds
For more information on claiming business vehicle trips see NBC’s blog post
FBT covers a wide range of categories, these can be viewed on the ATO’s website.
The information provided here is of a general nature and you should consult your Accountant for any questions regarding Fringe Benefits Tax.
Northern Business Consultants are expert tax accountants located in Brisbane North and have experienced and qualified advisors to assist you with all your tax and compliance requirements. If you require assistance with the compliance of your company or have questions on what can and cannot be claimed contact us or call us on (07) 3862 8777 for an obligation free consultation.