The offering of appealing fringe benefits can be the key to success in a competitive job market.
By providing additional incentives on top of salaries, businesses can attract and retain quality talent. The implementation of such benefits allows employers to demonstrate the value they place on their employees by tailoring and offering more attractive packages.
There are many fringe benefits that employers can offer, although benefits that fall into the travel and entertainment (T&E) category prove to be very common. T&E benefits often include allowances for staff to travel for personal reasons, along with entertainment by the way of food, drink and recreation. Before offering fringe benefits to employees, businesses need to understand the legal obligations inherent in the Fringe Benefits Tax (FBT).
So what is Fringe Benefits Tax (FBT) and why is it so important to do correctly?
Fringe Benefits Tax is paid by employers based on the taxable value of benefits provided to employees. These benefits can be wide-ranging, but often include certain T&E claim items. The Australian Taxation Office (ATO) usually does not alert businesses of FBT that needs to be paid, making it the business owner’s responsibility to self-assess when a FBT return is lodged.
The ATO also has very specific record-keeping requirements that all businesses need to follow in relation to FBT. They specifically ask:
- That records enabling FBT liability assessment must be kept for five years, starting from the date they are prepared, obtained, or from when the transactions are completed
- That all records relating to providing the fringe benefit, including how the employer worked out the taxable value of the benefits are kept
This might sound like a complex and time-consuming task, but luckily, there are solutions available that can simplify this process.
Businesses should look towards automated software solutions that allow them to easily track T&E spend on the go. This will not only free up time for employees, but will help to properly calculate FBT based on the regulations set by the ATO. Automated expense management solutions take the guesswork out of FBT liability for employees’ T&E spend, allowing more accurate reports to be created.
Implementing adequate solutions to ensure crucial data is recorded correctly for FBT purposes saves considerable time and eradicates a great deal of worry in the lead up and during tax-time.
These automated software solutions can:
- Enable you to properly calculate FBT based on current ATO requirements
- Include corporate card data transactions and easily track receipts, allowing you to capture the right information at the right time
- Help to eliminate mailing, paper and storage, so your tax records are secure and accessible in a unified system
- Increase employee compliance by incentivising a strong policy through easy-to-use mobile solutions
As we move into a notoriously busy time with the end of the financial year period looming, businesses need to implement the right solutions to address fringe benefits tax. It’s also important that all FBT requirements are addressed ongoing throughout the year, relieving heavy workloads for the finance department. Through the use of automated systems, small business owners will be able to feel more relaxed about providing their employees with fringe benefits, and also know that the benefits being offered are in line with ATO regulations.
