Obtaining and keeping exceptional staff comes hand-in-hand with fringe benefits especially as talent can be hard to come by. When deciding on those perks for new and existing employees Fringe Benefits Tax (FBT) should be considered. While many assets are assessable under FBT there are some that are exempt.
Benefits to employees costing under $300 are exempt from FBT if they are irregular and infrequent. An annual Christmas gift or meal is one such example of this what not come under FBT.
Cash Awards in the workplace
Genuine safety awards/gifts made to an employee in an FBT year up to a total value of $200 are exempt, however once over $200 the entire amount is subject to FBT.
Long service awards/gifts for service extending 15 years are usually FBT exempt. There is a limit of $1,000 for service of 15 years and $100 for each additional year of service. If the employer provides additional benefits after the initial award they are exempt so long as the total benefits provided does not amount to more that the 15 year $1,000 plus $100 for each additional year. If this amount is exceeded there is no FBT exemption on any of the award/gift.
Separate benefits provided by a work colleague in an arm’s length situation are not subject to FBT.
Nutrition and Exercise
Eating well and exercising is a focus of many individuals. When a business provides a program to employees to assist with managing their health, fitness and stress, and time for the program is allocated during the work day, the cost of the benefit is FBT free. The ATO requires the employer to have in place an objective, plan or policy to improve or maintain the quality of employee performance for the FBT exemption.
Portable electronic devices
As of 1 April 2016 small businesses are able to supply multiple work-related electronic devices to employees without incurring FBT. These devices may include laptops, tablets, calculators, GPS navigators and mobile phones. These can be supplied to employees regardless of whether the devices given have similar functions. Items bought before 1 April 2016 but supplied after this date are also eligible for the exemption, however if they were supplied prior to 1 April they are not.
Small businesses must have aggregated annual turnover of less than $2 million to be eligible. Businesses over this threshold must continue to follow the existing rules of one device per year.
Where employees are posted overseas FBT exemptions may include 50% of the cost of a return trip each year for the employee and family. Additionally, there is no FBT on the costs of education for the employee’s children so long as the child is under the age of 25 years old and is enrolled in full-time education.
Superannuation benefits paid to a foreign super fund on behalf of a temporary resident are also FBT exempt as they mimic the superannuation guarantee payments made for residents.
Other FBT exemptions to consider for FBT are:
– Compassionate travel by employees while living or traveling away from home on employment duties to attend a funeral of a close relative or to visit a seriously ill relative
– Disabled person car parking
– Newspapers and periodicals provided to employees for business purposes.
Contact your CTBS accountant for more information.