If you have employees and you provide them with cars, car parking, entertainment, employee discounts, reimburse private expenses, then you are likely to be providing a fringe benefit and you will need to register your business for Fringe Benefits Tax (FBT).
FBT is a tax payable by employers for benefits paid to an employee (or a family member) in place of salary or wages. Whilst fringe benefits may help attract top-notch employees, they also come with a string of tax obligations, especially when it comes to vehicles.
If a car you own or lease available for the private use of your employee, you may provide a car fringe benefit.
The Australian Tax Office (ATO) website defines a car is any of the following:
*a sedan or station wagon
*any other goods-carrying vehicle with a carrying capacity of less than one tonne, for example, a panel van or utility (including four-wheel drive vehicles)
*any other passenger-carrying vehicle designed to carry fewer than nine passengers.
The ATO has introduced a ‘simplified method’ for employers with 20 or more ‘tools of trade’ cars. Conditions that need to be met include the following; –
• valid log books must be maintained for at least 75% of the cars in the log book year;
• the employer must choose the make and model of the car;
• each vehicle must be purchased for less than $64,132 in (2016/2017);
• the cars aren’t provided under a salary packaging arrangement/employee remuneration package; and
• your employees can’t choose to receive additional remuneration in lieu of using the cars.
There are various apps that can help you keep track of your vehicles. Pricing ranges from $5 and $10 and are tax deductible.
There are some alternatives that are free of charge but don’t include as many features.
LogbookMe is a cloud-based platform that logs your trips automatically using GPS and vehicle data. The ‘plug and play’ set up is relatively simple and can make logging all those vehicles a lot easier. Out of pocket costs for 12 weeks are $248 +GST per vehicle. For 52 weeks it jumps up to $480 +GST per vehicle. For more information, visit www.logbookme.com.au
ATO Vehicle Log Book
This free app, made by the ATO and available for download from the iTunes app store. The app is fully compliant ATO Vehicle Log Bookith ATO requirements where the logbook method is used to claim the percentage business use of a vehicle. It also allows you to send the completed log directly to your employer, accountant or tax agent in excel / CSV format.
Vehicle Logger: This free app available for download at Google Play store, is designed to create, share and report vehicle log books for mileage, fuel, expenses, and tax purposes. It also steps up to that requirement with data storage /sharing options available for Google Drive, DropBox, Box & OneDrive.
Fringe benefits are an important part of business, and can be a useful way of attracting quality staff. However, if you’re going to provide fringe benefits to your staff, you need to be up to speed on the tac obligations.
At BDH Leaders, we advise you on the best strategies to help manage your fringe benefits tax. View more information on our tax services here