Consider Joseph’s case
Joseph runs a retail company and five of his sales staff receive motor vehicles as part of their employment agreement, which are accounted for using the operating cost method.
Outside of work Joseph’s passion is the Western Bulldogs and he loves to give his employees football tickets. Joseph would like to understand his Fringe Benefits Tax (FBT) obligations.
Recreation fringe benefits can be a complex area of FBT. Some key points to be aware of are:
• If the gift is of a minor and infrequent nature, such as theatre or football tickets that cost less than $300 per employee, then the entertainment is exempt from FBT.
• If the minor benefit exemption is applied then no Income Tax Deduction or GST credits can be claimed
• If the minor benefit exemption is not applied then FBT would apply to the value of the ticket
FBT obligations associated with this commonly provided benefit depend on:
• Availability to the employees for private use. If the employees only use the car during work hours generally no FBT applies, however if they garage the car at their house FBT may apply. Where private use is minor or infrequent FBT may be minimised.
• Whether or not employees make contributions to the running costs of the vehicle. Personal contributions may reduce any FBT obligations.
Should you wish to discuss your FBT obligations please feel free to contact Andrew Marshall or Janine Orpwood on 5427 8100 for an initial consultation.