Increase in FBT rate

From 1 April 2015, the Fringe Benefit Tax (FBT) rate will increase from 47% to 49%. While offering multi-faceted employment packages are a great way to attract new employees and keep your existing staff happy. With this increase, it may be time to reconsider the structure of your employee packages. The packaging of benefits which are FBT exempt may be worth consideration. Such benefits include:

  • Subscriptions to professional trade journals
  • Work-related:
    • Briefcases
    • Tools of trade
    • Phones
    • Calculators
    • Portable electronic devices such as personal digital assistants (PDAs), blackberries, electronic diaries, laptops, notebook computers, etc.
    • A portable printer designed for use with any of the above devices.

Likewise, providing benefits which are FBT exempt may be worth consideration. The FBT exemption can be applied under what is known as the “otherwise deductible” rule. For example, where an employee would be able to claim the expense, but the employer has paid instead, there is no FBT as this is covered by the “otherwise deductible” rule.

The message here is that with FBT increasing to almost 50% from 1 April, in structuring multi-faceted employee packages it makes more sense to include items that do not attract FBT rather that those that do.

If you wish to discuss restructuring your employee packages, contact our office today on 02 9299 7044 or shoot us an enquiry at admin@lockwood.com.au.

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