At this time of year we are all winding down for the Christmas break and probably not planning ahead for our 2019 tax liabilities!
The Fringe Benefits Tax (FBT) year ends on 31 March 2019 and now is a good time to ensure you have all of the necessary resources in place to work towards this date. FBT can be a somewhat daunting prospect for small businesses who may not have a dedicated accounting team in place to ensure everything runs smoothly. In particular for sporting clubs and not-for profit associations who may have restricted cashflow at certain times of the year, and limited resources at their disposal.
Are you a Rebatable Employer?
Your first step should be to ensure you are not paying too much in FBT. Your not-for-profit sporting organisation may qualify for the FBT rebate which can significantly reduce your annual tax liability. For the 2018/19 FBT year the rebate available is 47% of the gross FBT payable, subject to a $30,000 capping threshold: https://www.ato.gov.au/Non-profit/Your-workers/Your-obligations-to-workers-and-independent-contractors/Fringe-benefits-tax/FBT-concessions/FBT-rebate/
Are you calculating the correct taxable value for your employee benefits?
Secondly, you must make sure you are calculating the correct taxable value for all of the benefits provided to your employees and taking full advantage of any reductions available to your organisation.
A common example is a sporting organisation which may provide match tickets free-of-charge to its staff as part of their remuneration package. This gives rise to a property fringe benefit. The valuation rules around property fringe benefits are somewhat complex however in the example of match tickets, these may be classed as “in house property fringe benefits” and the taxable value of the benefit may be reduced by 75% if certain conditions are met: http://law.ato.gov.au/atolaw/view.htm?DocID=SAV%2FFBTGEMP%2F00018
Are you taking advantage of all concessions available to your organisation?
Finally, a reduction in total benefit value equal to $1,000 per employee per FBT year is available. This is a significant FBT concession / reduction and a great opportunity to provide a low cost benefit to all employees. This may be particularly relevant to sporting organisations who provide match tickets to employees because the concession applies only to:
- in-house expense payment fringe benefits
- in-house property fringe benefits
- in-house residual fringe benefits
You don’t need to keep specific records of in-house benefits provided to individual employees if you don’t expect the value of the benefits provided in the year to exceed the $1,000 limit.