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Fringe Benefits Tax and Your Business

With Melbourne Cup Day and Christmas parties fast approaching, now is the time to talk about the Fringe Benefits Tax (FBT) consequences of parties and gifts for employees.

So, what is Fringe Benefits Tax? FBT is a tax employers pay on certain benefits they provide to their employees. Parties and gifts are examples of entertainment fringe benefits, and in some circumstances, especially at this time of year, your business could become liable for FBT.

The following points are important to keep in mind when determining if your business is liable for FBT:

1. Is it a one-off occasion? If yes, is the value of the benefit per employee less than $300? If both of these conditions are true, then it may be a minor exempt benefit and no FBT is payable. If it is over $300, there will be FBT payable. Additionally, if the event occurs frequently, there is a chance there will be FBT.
2. If the event is held on your business premises, where food and drink are consumed by current employees on a working day, it is generally FBT exempt. If there are more than just employees, you will need to apportion the costs accordingly.

The implications of FBT vary from business to business, and the points above do not constitute advice. To discuss FBT and your business, please give the Crest Accounting team a call on (02) 4933 3466, and we will be more than happy to help.