You’re probably receiving correspondence from us regarding annual Fringe Benefits Tax (FBT) returns. It’s important to understand the choices available and the implications for your taxes.
Accountants and taxpayers have two choices when handling FBT:
- Submit a Fringe Benefits Tax Return:
– This means you pay tax on 46.5% of the grossed-up value of any fringe benefits.
– Essentially, you pay tax on double the amount of the benefit provided by your company or business.
- Employee Fringe Benefit Contribution:
– We put an income back into your accounts during your tax returns, effectively wiping out the value of the fringe benefit.
– Despite this, an FBT return still needs to be done. Filing this as a ‘nil return’ provides extra protection.
The Benefits of Filing an FBT Return
Filing an FBT return is crucial for several reasons:
– Draws a Line in the Sand: Filing an FBT return establishes a clear record with the tax office. Once lodged, they can only audit you for FBT for two years. Without this return, the audit period extends to four years.
– Best Insurance: For a nominal administrative cost, filing a nil FBT return is the best insurance you can get. It ensures compliance and minimises the risk of extended audits.
Why It Matters
Ignoring FBT returns or failing to understand their importance can lead to significant financial and administrative consequences. By choosing to file an FBT return, you are:
– Ensuring tax compliance.
– Reducing the risk of long-term audits.
– Taking advantage of a simple, cost-effective insurance policy.
In conclusion, whether you opt for a fringe benefits tax return or an employee fringe benefit contribution, it is essential to file an FBT return. This step safeguards your business, ensures compliance, and provides peace of mind. Don’t let the complexities of FBT overwhelm you—act now and protect your business.