Fringe Benefits Tax

We are aware that FBT is one of the more uncommon taxes your business may face and can be one of those taxes that are not at front of mind for many clients – but it is something that must be complied with. As always, we endeavour to making this process as smooth as possible for our clients and have provided you with the below summary on some of the key areas regarding FBT.

Fringe Benefits Tax Rate

For the 2024 FBT Year the FBT tax rate is set at 47%, this is aligned with the top individual marginal tax rate.

Reportable Fringe Benefits

If you provide certain fringe benefits with a total taxable value of more than $2,000 in the FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee’s payment summary for the corresponding income year.

Please note that the FBT gross up rates are:

• Type 1 Benefits – 2.0802
• Type 2 Benefits – 1.8868

Standard Forms

Should you require additional fringe benefits tax forms, they are listed below (click to download):

• Form 1 – Blank copy of the Fringe Benefits Questionnaire.
  
  
• Form 2 – Entertainment and Recreation Expenses schedule.
  
  
• Form 3 – Form for Vehicles Held at 31 March 2024 or sold during the year (include odometer readings, logbook percentage and operating costs if necessary).
  
  
• Form 4 – Form for vehicles purchased after 1 April 2023 (include details of both the cost of the vehicle or the sale of the vehicle and the necessary declarations for both the operating and statutory method).
  
  
• Form 5 – Logbook Checklist.
  
  
• Form 6 – Expenses Payments Schedule.

Loan Fringe Benefits

A Loan benefit arises when a loan is made to an employee (or associate), either without interest or at a rate lower than the benchmark statutory rate (currently 7.77% p.a. for the year ended 31 March 2024, was 4.52% p.a. 2023, was 4.52% p.a. in 2022.).

Expense Payment Benefits

The general rule is that private expenses paid for, or reimbursed, on behalf of employees or their families are treated as expense benefits and subject to FBT. Typical example includes the payment or reimbursement of mortgage payments, school fees and holiday expenses.

Electric Vehicle Discount

The electric car discount is an FBT exemption. This means that car fringe benefits provided by employers to employees, comprising the use or availability for use of an eligible car that has zero or low emissions are exempt from FBT if the relevant requirements are met.

• the benefit is provided in the year of tax in respect of the employment of a current employee.
• the car is a zero or low emissions vehicle when the benefit is provided.
• no amount of luxury car tax (LCT) has become payable on a supply or importation of the car. LCT threshold for fuel efficient vehicles ($89,332 for the 2023–24 financial year).

Section 8A applies to a car benefit only if the earliest time when a person both held and used the car was at or after the start of 1 July 2022.

A second-hand electric car may qualify for the exemption, provided that the car was first purchased new on or after 1 July 2022.

Cars that are zero or low emission vehicles - Battery electric vehicle, Hydrogen fuel cell electric vehicle, Plug-in hybrid electric vehicle.

Electric vehicles FBT exemption – key steps for employers

Although the private use of an eligible electric vehicle is exempt from FBT, the value of the benefit must be included when working out whether an employee has a reportable fringe benefits amount. Employers need to:

• Calculate the notional taxable value of the benefit for reportable fringe benefits purposes.
• Report the amount on the employee’s income statement or payment summary if the taxable value of the employee’s aggregated reportable fringe benefits is more than $2,000 in an FBT year.

Guidance on EV home charging rate

Practical Compliance Guideline PCG 2024/2 provides a cents per kilometre rate of 4.20 cents (the EV home charging rate) that can be applied to calculate the electricity costs of charging an electric vehicle at an employee’s or individual’s home. The rate is multiplied by the total number of kilometres travelled by the electric vehicle in the relevant FBT or income year. The Guideline does not apply to an electric vehicle that is a plug-in hybrid.

Car Parking Benefits

Broadly speaking, a car parking benefit arises when an employer provides parking for employees, for more than 4 hrs between 7 am and 7 pm, in a commercial car park which charges more than $10.40 per day (2023 – $9.72).

(If your business turnover exceeds $10 million for the year, this test is extended to any car park owned or leased by the business, such as in the basement of the business premises).

Minor Benefits

Minor Benefits are exempt from FBT if they are provided infrequently and irregularly to employees (or associates), and the value of the benefit is less than $300 (GST inclusive). However, no GST is claimable nor is it tax deductible, but the exemption might be more beneficial.

The most common situation where this exemption is applied is in relation to the staff Christmas party. However, please note that an employer is not entitled to use the minor benefit exemption if an election has been made to use the 50/50 split method to calculate FBT liability for meal entertainment benefits.

Meal Entertainment Benefits

Meal entertainment benefits arise where the provision of food or drink has the character of entertainment. The general rules are as follows:

1. Food or drink provided in a social situation will have the character of meal entertainment as opposed to being provided for refreshment or sustenance. If provided during work time or overtime the less likely it has the character of meal entertainment.
   
   
2. The more elaborate the meal, the greater the likelihood it has the characteristics of meal entertainment. Food or drink provided outside the employer’s premises is more likely to have the characteristics of meal entertainment (e.g., restaurant, cafe, or function room).

If you think that any of the above ‘other’ fringe benefits may apply to you or your business, please contact us on (03) 9551 2822 to discuss.