Lodging for FBT

Fringe benefits tax is paid by employers on certain benefits provided to employees (or associates, which includes family members) as part of an overall salary package, or in addition to ordinary wages. The tax (FBT) is separate from income tax, and more information on it can be found here.

As far as valuing benefits to calculate the tax that will apply, the Tax Office has come up with a list of categories of fringe benefits and devised specific valuation rules for each category.

The FBT payable on a benefit is 46.5% of its taxable value, and this is determined after a 'gross up' of the actual benefit occurs to reflect GST implications. The Tax Office has more information on this here.

If you have just started your business, and so have no fringe benefits tax history to call on for estimating possible tax, or if the annual FBT your business is liable for totals less than $3,000, your business will only be required to account for FBT once a year. The FBT year, by the way, differs from the financial year, and runs from April 1 to March 31.

But if you've included fringe benefits in the remuneration packages of staff and had to pay FBT (of more than $3,000 in a previous year), you must pay the current year's estimated FBT liability in quarterly instalments via your business activity statement (BAS).

The BAS form you receive from the Tax Office will contain the requisite fields for reporting FBT information, and if you are required to pay instalments the amount will be pre-printed on the BAS. The amount of each instalment will generally be one-quarter of the notional tax amount, or generally the same as the liability for the last FBT return processed.

If you think that this pre-printed amount will result in you paying more (or less) tax than you should, you are at liberty to vary it. However if the varied amount results in a total at year end that is less than 90% of the actual liability, a penalty can result. And if your instalments exceed your actual liability when you lodge the return, you will get a refund, so it's all just a matter of timing. But you may very well have some 'inside knowledge' that the Tax Office doesn't have, such as a plan to reduce fringe benefits, or planned staff changes that will result in less FBT liability.

And if you are already registered as an FBT payer, but you stop handing out fringe benefits altogether and won't have to lodge an FBT return, use this notice of non-lodgement form to stop the Tax Office chasing lodgement later. And if you had not varied the instalment amounts down to nil during the year, lodge a return and the Tax Office can update its records and refund the tax that you have already paid.

If you pay by instalments, you need to lodge all activity statements for the FBT year ending March 31 (which includes that March quarter) before lodging the annual FBT return. You must lodge a return if you have an FBT liability during an FBT year (here is the Tax Office's 2012 guide to completing a fringe benefits tax return). You can lodge electronically or by paper (the address in this case is GPO Box 9845 in your capital city).

Related reading: Is your business ready for the FBT year-end?

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Reviewed February 23, 2012