ATO warns businesses to be on top of fringe benefits tax as lodgement deadline looms

The Australian Taxation Office has delivered some bad news to employers that have provided staff with some form of benefit during the coronavirus pandemic to work from home.

Fringe benefits tax (FBT) is a little-known tax but is very much in the ATO cross hairs, with a May 23 lodgement deadline looming for people not doing their tax paperwork with the assistance of a registered tax agent.

Working from home was encouraged where possible during the pandemic’s peak, to help workers keep themselves and their families safe, while also ensuring the employer got things done.

Certain things will constitute a fringe benefit — something considered as a payment of salary in kind — and the employer may be liable for FBT for providing said benefit

“We have seen more employers providing fringe benefits to their employees because of COVID-19. This includes paying for items that allow their employees to work from home and providing non-cash benefits as an incentive or reward for employees to get their COVID-19 vaccination,” assistant tax commissioner Michelle Allen said.

“We’ve even heard of an employer providing their employees with pets to keep them company while they work at home!”

Allen says the tax office understands that people have been preoccupied with a range of matters but that there are obligations with which employers need to comply. She says there were likely to be some other tax law issues that could be considered as people dive into completing their fringe benefits paperwork for the tax office.

“Employers should also understand that in most cases they can claim deductions for the cost of providing fringe benefits and for the FBT they pay. Employers can also generally claim GST credits for items provided as fringe benefits,” Allen said.

Unlike the standard financial year in Australia April 1, is the commencement of the FBT year. As such returns needs to be prepared based on transaction based on 1 April and March 31 each year wit the due date for these returns being 30 June.

The normal deadline for lodgement of a return for fringe benefits with the tax office is usually about seven weeks after the FBT year has ended on March 31 each year.

If you have any questions regarding benefits, you have provided and whether an FBT is required please contact Matt or one of the accountants.