The Australian Tax Office announced on 12 May 2022, that this Financial Year may be the first time some companies are lodging a Fringe Benefits Tax return. This is due to some companies offering payment for items that allow their employees to work from home. Examples of these items may include providing non-cash benefits as an incentive, rewards for employees to get their COVID-19 vaccination, or even pets to keep employees company when working from home as a result of COVID-19.
The Australian Taxation Office (ATO) is now urging all employers that have provided their employees with fringe benefits, such as vaccine incentives to consider their fringe benefits tax obligations – such as registering, reporting, lodging, and paying FBT.
Fringe Benefits Tax
The Fringe Benefits Tax Year covers the 1 April 2022 through to the 31 March 2022, with the FBT return due by the 23 May 2022. For employers that are lodging their return through a registered tax professional, this year’s deadline is 27 June 2022.
Fringe benefits typically include gym memberships, allowing employees to use a work car for private purposes, or tickets to events. These are considered payments to employees, that are not included as salary or wages.
Fringe Benefits during COVID-19
During COVID-19 businesses were encouraged to operate with a Work from Home framework, allowing employees and their families to keep safe, while their companies were still able to operate. In fact, the Productivity Commission estimates that approximately 40% of the Australian workforce was under a working from home arrangement in their research released in September 2021, which is an increase from 8% of employees who had a formal working from home arrangement in 2019.
How will Fringe Benefits Tax impact your payroll?
From a payroll perspective for End of Financial Year, it is also important to ensure that any new items such as vaccine incentives, or work from home benefits are included when lodging your payroll finalisation for the Financial Year 2021-2022.
- Employers must record Fringe Benefits for employees with their end of financial year procedures if:
- The FBT Amount provided to the employee or their associate (such as a partner) exceeds $2,000;
The amount exceeding $2,000 is covered under the FBT year (1st April – 31st March).
Employers are required to gross-up this amount and report it so that this is included in employees’ income statements once the payroll is finalized for the financial year.
“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,” Michelle Allen, assistant to the ATO Commissioner said. For information on lodging via a Registered Tax Agent, the ATO recommends contacting one directly.
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The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.