As we progress into 2024, it’s imperative for both businesses and employees to grasp the fundamentals of Fringe Benefit Tax (FBT) and its evolving landscape.

What is FBT?

FBT is a tax that employers pay on non-cash benefits paid to an employee or their associate. FBT is calculated on the taxable value of the benefits you provide.  The FBT year runs from 1 April to 31 March.

Common types of FBT

• FBT on motor vehicles, parking/tolls – private usage, car leasing, car parking and road tolls;
• Entertainment-related fringe benefits – food, drink or recreation;
• Loan and debt waiver fringe benefits – lend money to an employee;
• Accommodation related fringe benefits – housing, board or living away from home allowance;
• Property fringe benefits – physical goods, real estate or shares;
• Expense payment fringe benefits;
• Residual fringe benefits.

2024 Lodgement due date

The payment and lodgement due dates are:

• For employers and tax agents who lodge via paper – 21 May 2024 or
• For tax agents who lodge electronically – 25 June 2024

Please be mindful for the employers that are registered for FBT to complete and lodge a Notice of non-lodgement – Fringe benefits tax form if they do not require to lodge an FBT return for the year.

Key threshold and rates for 2024 FBT year

• FBT rate is consistent with previous year being at 47%;
• Type 1 gross-up rate being 2.0802;
• Type 2 gross-up rate being 1.8868;
• Record keeping exemption threshold at $9,786;
• Motor vehicle – cents per km rate (0-2500cc at 62c, Over 2500cc at 73c and Motorcycles at 18c);
• Car fringe benefits statutory formula rate at 20%;
• Deemed depreciation rate for cars at 25%;
• Car parking threshold at $10.40;
• Statutory or benchmark interest rate at 7.77%

Common errors

Motor vehicles is the most common area in which the ATO sees errors, including:

• Inaccurate categorisation of vehicles as cars;
• Using the wrong rates and thresholds;
• Not maintaining appropriate records ie. Logbooks, and
• Providing employees with motor vehicles for private usage but considering the vehicles as 100% business use.

Common FBT exemptions

• Minor benefits that satisfy the criteria of: less than $300 (inclusive of GST) in value per employee and provided on an infrequent basis may be exempt from FBT.
• Food and drinks provided which meets the all of the following criteria:
  • Consumed by current employees;
  • Consumed on the business premise;
  • Consumed on a working day.
• Items that are primarily used for work purposes may be exempt from FBT ie. Laptops, mobile phones or tools.
• Not-for-profit organisation may be exempt from FBT up to a capped threshold. These include:
  • Public benevolent institution and health promotion charities are capped at $30,000 per employee;
  • Hospitals and ambulance services are capped at $17,000.

The threshold is the gross-up value of fringe benefits per employee.

• Dual Cab Utility Vehicle exemption for vehicles with limited private use
• Remote Area exemption for accommodation provided to employees in a remote area

The above list is not an exhaustive list of all available FBT exemptions and eligibility criteria apply to each exemption. Please contact your trust HCQ adviser to discuss your situation for further information.

FBT for Electric Vehicles (EVs)

With regards to Electric Vehicles (EVs) there are specific and evolving, legislation and incentive opportunities. Our January 2023 article mentioned the Fringe Benefits Tax (FBT) Incentive for Electric Cars and it is worth reviewing this incentive and structure to see if this opportunity may apply to you.

Our September 2023 article also discussed how salary packaging electric vehicles (EV) as part of your remuneration package can save you in income tax paid on your salary. Read more about the benefits of salary packaging your Electric Vehicle here.

This year, FBT regulations may undergo adjustments, including variations in rates, thresholds, and the inclusion/exclusion of specific fringe benefits. It’s crucial to stay updated with changes from relevant tax authorities to maintain compliance.  As each employer position is different, for any assistance please contact your Hall Chadwick QLD advisor.