FBT or Fringe Benefits Tax is a complex area of tax that is commonly referred to as "the fun police" as it was the end of the long boozy lunch that could be claimed as a tax deduction. FBT was implemented in 1986 to improve the fairness of the taxation system and was designed to overcome deficiencies in the income tax law that allowed benefits other than salary and wages to be tax-free income. Liability for FBT is assessed on an annual basis, with the FBT year beginning 1 April and ending 31 March.
FBT broadly is a tax on benefits provided to employees and their associates; vehicles, gift vouchers, bottles of wine, tickets to sporting events & shows, meals, reimbursements for private expenses, below market rate loans etc.
There are exemptions that can reduce your liability such as the minor benefit exemption excluding items under $300 that are minor and infrequent*, the portable electronic devices exemption for laptops and iPads etc* and other work related items such as computer software, briefcases, protective clothing and tools of the trade.*
*not an exhaustive list of exemption criteria
Entertainment and meal entertainment specifically is the most complex part of the FBT legislation and one that leaves many businesses open for an ATO audit if they do not comply correctly.
The ATO provides a short list to help assist you in whether you need to register for FBT here. FBT is a complex are of tax law and if not interpreted correctly can be very costly. Contact us today on 1300 TWO SIDES to discuss your potential FBT liability and whether any exemptions apply.
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Two Sides Accounting
02 9030 0269