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2017 FRINGE BENEFITS TAX (‘FBT’)

By Admin

March 1, 2017

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M Squared would like to inform our valued clients of vital information relating to FBT in 2017:

  • FBT is a tax imposed on employers who provide certain benefits to employees and their associates in connection with their employment.  These benefits include but are not limited to the provision of motor vehicles (either directly or under a novated lease), reimbursement or payment of personal expenses, providing housing, meals and entertainment, car parking and living-away-from-home allowances.
  • The current FBT year runs from 1 April 2016 to 31 March 2017.  FBT returns are generally due for lodgement and payment by 28 May 2017.

Current FBT rates

  • To prevent high-income earners from salary packaging fringe benefits to avoid the budget repair levy, the government has increased the FBT rate from 47% to 49% from 1 April 2016. This will keep the FBT rates aligned with the top marginal income tax rates.  The FBT rate will revert back to 47% for the year ending 31 March 2018.
  • The taxable value of fringe benefits must be grossed-up by the appropriate rate to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to purchase the benefits after tax.
  • The current FBT gross-up rates are as follows:
    • o   Type 1 – this rate is used where the employer is entitled to a goods and services tax (‘GST’) credit relating to the provisions of a benefit.  For the year ending 31 March 2017 the gross up rate is 2.1463.
    • o   Type 2 – this rate is used if the employer is not entitled to claim GST credits. For the year ending 31 March 2017 the gross up rate is 1.9608.
  • Car Fringe Benefits statutory formula rates:
    • o   A flat rate of 20% applies regardless of distance travelled (except for existing commitments in place prior to 10 May 2011).

Lodgement program

  • If M Squared & Associates have prepared your FBT return in previous year’s we will contact with you shortly after 31 March 2017 to commence this year’s FBT return lodgement process.
  • If you have not lodged a FBT return previously but are required to this year, please advise us and we can contact you to discuss the process.
  • If you have any concerns about the impact of FBT or would like to explore ways of minimising your FBT cost and/or implement effective salary packaging programs, please don’t hesitate to contact us.

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