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Fringe Benefits Tax: Compliance or Opportunity?

Tax accounting newcastle
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Many employers miss the real opportunity of Fringe Benefits Tax (FBT) time. Most taxpayers see it as complicated, a burden and an additional cost which takes away attention from driving business initiatives.

Employees are a valuable resource of any organisation, and the success of an organisation is the ability of those employees to be engaged and motivated to achieve the organisations vision or strategy.

If you do not review your employee’s performance regularly then FBT time is a great opportunity to ask yourself “Am I rewarding my employees financially or with non-cash benefits that hits all the right buttons?”. Some employees are not interested in financial benefits however are interested in culture, training, respect, recognition, feedback, incentives, ability to make a difference and work life balance and all of these factors should be addressed in developing a motivational framework.

In drafting any framework, one critical issue is to avoid benefits that attract FBT which is taxed at the highest marginal rate of tax. Your accountant should review whatever you propose to avoid any nasty surprises.

Some of the benefits you can provide which are outside the FBT scope to drive employee motivation and satisfaction could include:

  • Share of Profits
  • Referral fees for new customers
  • Ability to buy extra annual leave
  • Bonus for exceeded budgets/new ideas
  • Days off for exceptional performance
  • Incentives and support for training
  • Ability to acquire ownership
  • Team bonus
  • Holiday on birthdays/milestone events
  • Flexible hours
  • Extra superannuation support

Other financial benefits you can provide for employees which are also potentially outside the scope of FBT if structured correctly can include:

  • Employee health prevention measures
  • Packaging of portable electronic devices
  • Flu vaccinations
  • Motor vehicles
  • Gym memberships
  • Course fees
  • Relocation benefits
  • Car Parking
  • Safety awards
  • Employee amenities

This is not an exhaustive list and is general in nature.

FBT time can be a time to ask “What am I doing to ensure my employees are aligned to our organisations vision and strategy and am I doing it in the most cost effective manner”?

As with any employee matters, if you are not sure you should obtain independent legal and accounting advice. Contact us for advice.

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