Focus on SMEs: Cropping Fringe Benefit costs

Businesses can pay less Fringe Benefit Tax costs by using the rules to their advantage. Photo / Thinkstock

PROBLEM

We are keen to reduce our Fringe Benefit Tax costs. What are the best ways to pay less?

SOLUTION

Daniel Hunt, managing director of Daniel Hunt & Associates, says you can pay less Fringe Benefit Tax (FBT) costs by using the rules to your advantage.

1. Business tools

No FBT will apply to business tools - iPhones, laptops, etc - given to employees, provided they cost less than $5000.

2. Carparks

Carparks provided to employees will not be subject to FBT if they are on an employer's premises. This exemption extends to employers who lease carparks for their employees, provided the employer has an exclusive right to occupy the carparks.

3. De-minimise exemption

Actively structure minor benefits (ie, gym memberships) to ensure they are less than $300 per quarter, per employee. If this is the case, FBT will not apply to such benefits.

4. Utilise the alternate rate method

Under this method, benefits are attributed to individual employees, so the FBT payable will vary according to each employee's income level. The cash savings of using this method can be considerable, as it ensures employees earning less than $70,000 are not over-taxed.

5. Work-related vehicle exemption

This covers circumstances where employees may store a vehicle at home and only use it to travel to and from work. To qualify for this exemption, you must meet certain requirements, such as having the employer's name or logo displayed on the vehicle's exterior.

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