WHY WOULD I USE FRINGE BENEFITS, AS A SMALL EMPLOYER?
As a small business, perhaps a start-up or a family business you may not have the finances to beat the large companies to the best staff, but you can offer fantastic incentives to get them on board and create the right environment for them, and your business, to thrive.
Employees are often motivated by more than just the money. It is an environment of mutual support that helps people go the extra mile for their boss. This may be that you provide a great café quality coffee machine onsite but it may be the things outside of work that help them stay focused and well that keep them motivated.
1. WHAT ARE FRINGE BENEFITS
Fringe benefits are non-monetary things given to employees outside of their salary or wages.
- They may include the use of the company car for personal time.
- Tickets to concerts or restaurant vouchers.
- Gym memberships
- Discount loan or accommodation.
- It is NOT shares for the employee under an agreed scheme.
- Employees exit package bonuses.
- Superannuation paid by the employer.
- Benefits paid to volunteers or contractors.
2. HOW DOES IT APPLY
FBT is considered to be some of the most complicated tax laws for small business. There are many concessions to fringe benefits and ways to keep it down while essentially still offering the same services.
In a nutshell, when working out your FBT liability you must gross-up the taxable value of benefits you provide, to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax.
It can be hard to figure out how to get the most out of providing for your employees but talking to your accountants can help clear things up.
Benefits that are income tax deductible may not attract FBT. Using a taxi instead of an Uber will not attract FBT. Also, Small businesses can provide more than 1 portable electronic device to employees and any benefits worth less than $300 may be considered a minor benefits and not subject to the same taxes.
Definitely worth talking to a professional to see which items can be minimised for you.
3. WHAT ARE THE BENEFITS OF FRINGE BENEFITS?
Fringe benefits demonstrate commitment and often faith in your employees and can be used to attract and maintain the best quality employees.
Not all fringe benefits will come at a higher cost to you as the employer but it is about hearing your employee and what matters to them.
- Work life balance may be the pinch pin for some so offering work from home options or flexibility in hours may be all it takes to allow them to attend a ballet recital and therefore stay onboard as they may not get this elsewhere, and it does not have to cost you anything.
- Demonstrating commitment to their career progression and available training may be another good one worth looking into. Often subsidised by the government already educational packages can give more bang for their buck.
4. WHEN IS FRINGE BENEFITS TAX DUE?
Unlike income tax Fringe Benefits Tax is calculated by the employer at the start of April. It runs from April 1 until March 31 every year. It is important as a small business to put it on your calendar.
Using Single touch payroll may be a great option for you, being an ATO initiative to try and streamline tax reporting. It can assist with calculations for you and help take out the headache, but it may not be for everyone and We recommend talking with your accountant to make sure everything is accounted for.
Fringe Benefits Tax is often considered Australia’s most complicated tax laws, DON’T get caught out, talk to your financial advisor or qualified tax accountant today.
https://www.abatax.com.au/the-essential-small-business-guide-to-fringe-benefits-tax/
https://www.commbank.com.au/articles/tax/quick-guide-to-fringe-benefits-tax.html
https://www.roberthalf.com.au/management-advice/performance/employee-benefits
