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Navigating Fringe Benefit Tax


Navigating the Fringe Benefits Tax (FBT) landscape requires caution and clarity. As the FBT year concludes on 31 March, it’s essential to understand potential pitfalls that could attract the ATO’s scrutiny.

With the advent of electric vehicles (EVs), there’s a new terrain to explore. The government’s concession for EVs aims to mitigate the 47% FBT on private use, but nuances abound. To qualify, the car’s value must fall below the luxury car tax (LCT) threshold for fuel-efficient vehicles, and it must be first held and used after 1 July 2022. However, come 31 March 2025, plug-in hybrid EVs may lose their FBT exemption unless specific conditions are met.

Peculiarities emerge in the FBT realm. Sole traders and partnership partners are excluded from the FBT exemption, limiting its accessibility. Additionally, if LCT applies to the car or if it has been used by a previous owner before 1 July 2022, eligibility for the exemption diminishes. Home charging stations don’t qualify under the exemption, constituting a separate fringe benefit.

Despite potential FBT exemptions, accounting for the fringe benefits’ value remains imperative. The ATO mandates reporting fringe benefits on employees’ income statements, impacting various areas like Medicare levy surcharge and private health insurance rebates.

Electricity costs pose another consideration. While the ATO’s shortcut method simplifies calculations at 4.20 cents per kilometre, alternative methods necessitate isolating and calculating electricity consumption.

Moreover, direct purchases or leases by employees nullify the FBT exemption, except for meticulously structured novated lease arrangements. Only EVs classified as cars qualify for exemptions, excluding electric bikes and heavy-duty vehicles.

Beyond EVs, FBT compliance extends to various scenarios, emphasizing the importance of registration and diligent review. Recent legal precedents, exemplified by the Bechtel Australia case, underscore the nuances of employee travel and FBT liability.

Understanding these complexities is paramount for businesses aiming to navigate the FBT landscape effectively. As the FBT year concludes, proactive measures and strategic guidance can mitigate risks and ensure compliance with regulatory requirements.

If you would like help with your FBT or tax return this financial year, get in touch with the team at Amarose Group. Our expert business accountants are based in Maudsland on the North Gold Coast and can help you to set up your business for success when it comes to business tax.

Contact us to learn more about how our business advisory services can help you achieve your goals and propel your business forward.

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