Staying updated with the latest fringe benefits tax (FBT) developments is crucial for business owners.
In 2024, there are important changes in FBT regulations that you need to be aware of to ensure your financial health.
Let's discuss the key updates directly impacting businesses:
Car Fringe Benefits: Recent guidance from the Australian Taxation Office (ATO) clarifies that no car fringe benefit arises when an employer provides a car for extensive workshop repairs, as long as it is not used for private purposes and not held by the employer during the repair period. However, this exemption does not apply to minor repairs or routine servicing.
Hire Cars: If you hire a car for private use for three months or more, it is considered a car fringe benefit. If the hire arrangement is less than three months, it is classified as a residual fringe benefit.
Logbook Method: The ATO now allows the operating cost method to be used for evaluating car fringe benefits, even when the logbook requirement has not been satisfied or maintained. This provides more flexibility in valuing car fringe benefits.
Car Signage: Employers need to be cautious when providing cars with company signage, as it may give rise to a car benefit. Any dual-purpose use, including private and business aspects, should be considered.
Electric Vehicles (EVs): Recent amendments introduce FBT exemptions for eligible EVs provided to employees or their associates. However, exempt electric cars are still reportable for employees' income statements or PAYG payment summaries. Installing an electric car charging station at an employee's home is a property fringe benefit, with any reimbursement for installation classified as an expense payment fringe benefit.
Panel Vans and Utes: Employers must be careful when applying FBT exemptions to these vehicles. From 2023 to 2025, the ATO has extended its motor vehicle data-matching program, gathering information on vehicles registered with a purchase price exceeding $10,000.
Employee or Contractor Classification: Determining worker classification is critical for FBT purposes. Engaging a non-individual "interposed entity" can help reduce the risk of workers being classified as employees.
Car Parking Benefits: Employers should ensure a "commercial parking station" is available within a one-kilometre radius of the parked car to provide car parking benefits without an FBT liability. Some special-purpose parking facilities can still be classified as commercial parking stations. Small business entities with less than $50 million turnover may be eligible for car parking benefits exemptions.
Employee Travel and Education Costs: Employers must be cautious when paying for these costs. Travel between home and work is generally not deductible for FBT purposes unless it is part of the employee's work activities. When paying or reimbursing course fees, consider FBT exemptions and assess whether the "otherwise deductible rule" can reduce the benefit.
Updated FBT Rates and Thresholds: Please be aware of the updated FBT rates and thresholds for the 2024 FBT year. Refer to the attachment for specific details.
In conclusion, it is crucial for business owners in Australia to stay informed about the latest FBT developments. By understanding and incorporating these changes into their financial planning, they can effectively manage their fringe benefit obligations and ensure compliance with FBT regulations.
As always, we are here to answer any questions; please call the WLW Group on 1300 937 724.