FBT

Fringe Benefits Tax Returns and Reporting

Identifying which benefits are actually caught, valuing them correctly and lodging the FBT return — on a tax year that runs on its own calendar.

1 Apr – 31 Mar
FBT year, not the income year
Logbooks
Evidence made during the year
Vehicles & entertainment
Most common exposures
Company vehicle provided to an employee

Fringe benefits tax catches employers who were not thinking about tax at all. A vehicle made available for private use, a client dinner that included staff, a car park, a loan on favourable terms, or a phone bill paid on someone’s behalf can all constitute a benefit provided in respect of employment — and FBT is paid by the employer, not the employee who received it.

The first trap is timing. The FBT year runs from 1 April to 31 March, out of step with the income year that ends on 30 June. Employers who plan their compliance calendar around June alone routinely discover the FBT position after the FBT year has already closed, at which point the facts are fixed and the only remaining question is how much.

What’s included

What FBT work covers

  • Benefit identificationReviewing what the business actually provides to employees and associates, including the items nobody thought of as a benefit.
  • Motor vehicle benefitsValuing car benefits under the available methods, and identifying which produces a defensible result on the records that exist.
  • Entertainment and mealsWorking through which food, drink and event costs are caught, which are exempt, and how each should be treated.
  • Exemptions and reductionsApplying the exemptions and reductions that genuinely apply, rather than either ignoring them or over-claiming them.
  • FBT return preparationPreparing and lodging the annual FBT return for the year ended 31 March.
  • Employee reportingDetermining reportable fringe benefits amounts for individual employees where the reporting threshold is met.
Restaurant table representing entertainment benefits
Who it’s for

Who this suits

Employers with vehicles. Where cars are made available to employees and private use is possible, which is the most common FBT exposure by a wide margin.

Businesses that entertain. Where client and staff entertainment is a normal cost of doing business and the treatment has never been examined.

Employers offering packages. Where remuneration includes non-cash components and the FBT consequences need to be understood before the package is agreed.

Process

The FBT cycle

1

Review what is provided

A structured look at benefits provided during the FBT year, working from the ledger as well as from what management reports.

2

Confirm the records

Whether the evidence needed to use a particular valuation method exists — especially logbooks and odometer readings.

3

Value and calculate

Benefits are valued under the appropriate method and the FBT position calculated, with the working papers documented.

4

Lodge and report

The FBT return is lodged for the year ended 31 March, and reportable amounts are provided for employee reporting where required.

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What this page covers — and what sits elsewhere

The second trap is records. Vehicle benefits in particular are valued using methods that depend on evidence created during the year — logbooks, odometer readings at specific dates, records of days unavailable. That evidence cannot be recreated afterwards. Vehicles and benefits provided through the pay cycle interact closely with payroll services, and the FBT paid is itself dealt with in the employer’s own income tax return.

Related services

Works well with

Payroll ServicesWhere benefits are provided through the pay cycle and reportable amounts flow into employee reporting.Read more Taxation ServicesThe employer’s own income tax return, in which the FBT position has consequences.Read more Bookkeeping SolutionsWhere coding entertainment and vehicle costs correctly during the year makes the FBT review straightforward.Read more

View all accounting services

Questions

Common questions

When does the FBT year actually end?
The FBT year runs from 1 April to 31 March, which is deliberately different from the income year ending 30 June. That mismatch is the single most common reason employers get caught out, because the FBT year has already closed by the time most businesses start thinking about their June obligations. Lodgement and payment dates are published by the ATO.
We provide a work ute. Is that automatically exempt?
Not automatically. Exemptions exist for certain vehicles where private use is limited to specific kinds of travel, but the exemption depends on the vehicle’s design and on how it is actually used — not on what it is called or what it is intended for. Assuming a ute or van is exempt without checking the conditions is a frequent and expensive mistake.
What if we have never lodged an FBT return?
Not every employer is required to lodge — if no fringe benefits were provided, or the taxable value is nil, there may be no return required. The problem is that many employers assume that is their position without ever testing it. A review establishes whether a liability exists, and if there is historical exposure it is generally better to deal with it deliberately than to wait for the question to arrive.

Speak to a chartered accountant

Tell us what you need and we’ll let you know whether we can help, what it involves and what it costs — before you commit to anything.

General information only. This page describes services provided by DKD Accounting and is general in nature. It does not take account of your objectives, financial situation or needs, and it is not tax, legal or financial product advice. Rates, thresholds and caps change — always confirm current figures with the ATO or speak to us about your circumstances.
Source: ATO — Fringe benefits tax · ATO — Tax rates and codes