FIVE TIPS TO MAXIMISE FRINGE BENEFITS TAX

FIVE TIPS TO MAXIMISE FRINGE BENEFITS TAX

SMALL to medium sized businesses risk paying more fringe benefits tax (FBT) than necessary by using the wrong calculation method, according to Concur.

The travel and expense management provider says many businesses can control company expenses and save money by improving the way they calculate meals and entertainment.

FBT for expenses is generally calculated on an annual basis using either the 50/50 split method, the 12-week register or the actual method.

Concur Australia & New Zealand managing director Matt Goss says most businesses have a handle on identifying FBT, but use the incorrect calculation process.

"While many organisations can confidently identify where FBT is applicable or not, they often struggle to identify which method is best for their business and as a result pay more FBT than necessary," Goss says.

"In an economic climate where expenses are increasing and budgets are shrinking, you simply cannot afford to over-calculate your FBT obligations nor choose the wrong method of calculation.

"In fact, the Australian Taxation Office (ATO) encourages businesses to select the method which results in the lowest FBT payment.

"A better understanding of the three FBT calculation methods will help guide you in the right direction.

"However, the only way to confirm which method is best is to test them on a case-by-case basis and ensure you have the tools in place to optimise the calculation processes to start delivering real savings back to your business."

Goss says most businesses use the 50/50 method, as they don't have the systems in place to analyse the most effective FBT calculation method.


CONCUR'S TOP FIVE FBT STRATEGIES


1. Automate the expense management process.

Automating the process lets SMBs determine the lowest FBT liability automatically. It provides full visibility into expenses and enforces the travel and entertainment policy to optimise the expense management process. It also saves employee time.

2. Use clear descriptive definitions for meal and entertainment expenses.

Over-complicating it will confuse employees and impact the quality of data from both a calculation and compliance perspective.

3. Train employees.

Ensure employees understand the difference between the travelling and non-travelling employee status as this affects the FBT liability.

4. Use an employee master list to ensure data accuracy.

Make it simple to search for employee data and avoid multiple versions of the same data.

5. Review the FBT reporting method annually.

Don't assume a specific calculation method will always equate to the lowest FBT liability.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How to conduct an effective board assessment: a step-by-step guide
Partner Content
Your directors should conduct a board assessment annually. Let's examine what a boa...
OnBoard
Advertisement

Related Stories

Lendlease teams with QuadReal for its first Australian build-to-rent project in Brisbane

Lendlease teams with QuadReal for its first Australian build-to-rent project in Brisbane

Property giant Lendlease (ASX: LLC) has joined forces with Canadian...

Mighty Craft profitable as quarterly revenue nearly doubles

Mighty Craft profitable as quarterly revenue nearly doubles

A listed craft beverage business that owns 10 per cent of in-admini...

HPP, formerly Buderim Group, to be shelled through $33m MacFarms macadamia business sale

HPP, formerly Buderim Group, to be shelled through $33m MacFarms macadamia business sale

Brisbane-based Health and Plant Protein Group (ASX: HPP) will becom...

Will philosophy and ‘counterfactuals’ help us unlock the mysteries of AI?

Will philosophy and ‘counterfactuals’ help us unlock the mysteries of AI?

Artificial intelligence is increasingly being rolled out all around...