Effective Fringe Benefits Tax Strategies

As a result of legislative changes that have occurred over the last four to five FBT years, the taxable value of fringe benefits has been increasing year upon year. This is particularly with respect to car fringe benefits calculated under the statutory formula method.

This method previously provided a concession by reducing the car’s taxable value by each increasing block of kilometres travelled by the car. However, under the current rules the taxable value is calculated as 20% of the car’s base value irrespective of the number of kilometres travelled.

The changes to the statutory formula method in conjunction with the FBT rate of tax increasing from 46.5% to 49% for the 2016 and 2017 FBT years, has generally resulted in significant increases to the ‘FBT footprint’.

 To mitigate the effects of these changes, we have helped many of our clients reduce the amount of FBT that is paid by implementing some strategies, such as:

  • Where appropriate, assisting our clients to transition to the ‘log book’ method for car fringe benefits;
  • Planning corporate events with the view to maximising exemptions and reductions;
  • Reviewing existing salary packaging arrangements and recommending tax effective alternatives;
  • Considering alternative valuation methodologies for other non-car fringe benefits; and
  • Considering employee contributions to eliminate the FBT liability in full.

If you want to discuss whether these strategies can be implemented in your group, please contact our Tax Consulting experts below, as you should be exploring these opportunities prior to the start of the new FBT year.


Contact our Tax Consulting experts

If you have any questions about the above article, please contact our Tax Consulting experts:

Tony Nunes

B.COM, LLB, LLM, M.TAX, CTA

Client Director

P: (02) 9233 8866

E: tony.nunes@kellypartners.com.au


Peter Cohilj

B.BUS, M.TAX, CA

Senior Manager

P: (02) 9233 8866

E: peter.cohilj@kellypartners.com.au


Disclaimer:

While we have made every attempt to ensure that the information contained in this article has been obtained from reliable sources, Kelly+Partners is not responsible for any errors or omissions, or for the results obtained from the use of this information.