Fringe Benefits Tax (FBT) is a tax that is levied on the non-cash benefits provided to employees in addition to their salary or wages. FBT is a separate tax from income tax and is paid by the employer, not the employee.
Here are some reasons why businesses should consider reviewing their fringe benefits:
Compliance with tax laws
FBT is a legal obligation for employers who provide fringe benefits to their employees. It is important for businesses to comply with the FBT laws to avoid penalties and interest charges resulting from ATO reviews into Fringe Benefits.
Tax savings
By properly managing their FBT obligations, businesses can reduce their FBT liability and save on taxes. An example of this is considering whether an employee contribution is more tax beneficial than paying FBT on a motor vehicle. Another example is to review the meal entertainment provided to employees to see which method of calculating FBT will provide a better tax outcome.
Attract and retain employees
Offering fringe benefits to employees can help businesses attract and retain talented employees. By providing additional benefits beyond salary or wages, businesses can improve employee morale and job satisfaction.
Competitive advantage
Businesses that offer attractive fringe benefits packages can gain a competitive advantage in the job market. This can help them attract top talent and stand out from other businesses.
Improved financial management
Properly managing FBT obligations can help businesses improve their financial management by providing a clearer understanding of their tax obligations and opportunities. This can help businesses make informed decisions about their investments, expenses, and other financial decisions based on their tax implications.
