The 2024 Fringe Benefits Tax (FBT) year runs from 1 April 2023 to 31 March 2024.

If you are getting assistance from Harris Black (your tax agent) with your 2024 FBT return, the due date for lodgement and payment is 25 June 2024.

What is FBT?

FBT is a tax on non-cash benefits provided to employees or their associates. This also includes non-salary directors/trustees. The tax is paid by the employer and is separate from income tax. Below are some common examples of non-cash benefits provided to employees where FBT may apply:

• Allowing a vehicle owned by the employer to be used by an employee for private purposes.
• Payment of expenses on behalf of an employee.
• Providing entertainment to employees such as Christmas parties, meals, drinks, or recreational activities.
• Providing loans to employees or forgiving debts owed by the employee to the employer.
• Payments to an employee to compensate for living expenses incurred due to having to live away from their normal place of residence for work purposes.

What to do next

In preparation for the 2024 FBT year ended 31 March 2024, please be sure to:

• Consider if you have provided non-cash benefits to employees that may be relevant for FBT.
• Consider keeping a logbook for a period of 12 weeks detailing the business/private use of any vehicles used by employees. This allows for calculation of the FBT using the operating cost method which can often yield a more favourable result.
• Make note of the closing odometer reading at 31 March 2024 for any vehicles used by employees.
• Provide explanations for transactions in your online accounting software for any transactions coded to ‘Entertainment expenses’ or ‘Staff amenities’ to allow your Harris Black team member to differentiate between FBT-applicable and FBT-exempt transactions.

Harris Black has recently sent FBT checklists to clients operating businesses to assist with identifying FBT reportable benefits. If you do not receive a checklist but believe you may have provided applicable non-cash benefits, please let your Harris Black team member know.

If you have any questions, or would like to discuss your specific situation, please do not hesitate to contact us.

Generally, work-related self-education expenses are tax-deductible if they enhance skills and knowledge or lead to an income increase related to current income-producing work, for the person claiming the deduction.

Self-education expenses include the costs of courses at an education institution (whether leading to a formal qualification or not), courses provided by a professional organisation or an industry organisation, attendance at work-related conference or seminars, self-paced learning and study tours (whether within Australia or overseas).

Self-education expenses are tax-deductible if your income-earning activities are based on the exercise of a skill, or some specific knowledge, and self-education enables you to maintain or improve that skill or knowledge; and/or the self-education objectively leads to, or is likely to lead to, an increase in your income from your income-earning activities in the future (eg through a real opportunity of promotion, or eligibility for a higher pay grade or bonus).

You cannot deduct self-education expenses if the education is undertaken or designed to obtain employment, obtain new employment, or open up a new income-earning activity (whether in a business or in current employment). A deduction is also not available if you weren’t undertaking income-earning activities to derive assessable income (either by employment, carrying on a business or other means) at the time you incurred the self-education expense.

For self-education expenses that are only partly deductible, you need to apportion the amounts spent and claim only the part that relates to an income-earning purpose.

Recently, the ATO updated its small business benchmarks to encompass the 2021–2022 income year. While the ATO promotes these benchmarks as an aid for small businesses to enable them to compare expenses and turnover with other similar small businesses in the same industry, it is important to note that these benchmarks are also used by the ATO to identify businesses that may be avoiding their tax obligations.

According to the ATO, it uses small business benchmarks along with other risk indicators to select businesses for further compliance activities.

The benchmarks themselves are divided into nine broad business categories: accommodation and food; building and construction trade services; education, training, recreation, and support services; health care and personal services; manufacturing; professional, scientific and technical services; retail trade; transport, postal and warehousing; and other services. These categories split into additional subcategories; for example, bakeries, chicken shops, coffee shops, kebab shops and pubs all have their own separate subcategory under accommodation and food.

There are five tax return benchmark ratios calculated by the ATO, each expressed as a percentage of turnover (excluding GST). These consist of total expense/turnover, cost of sales/turnover, labour/turnover, rent expenses/turnover, and motor vehicle expenses/turnover. To calculate the turnover, the ATO generally uses the amount reported at the “Other sales of goods and services” label on the tax return or, if that figure is not present, the figure from the “total business income” label.

Small businesses can use the Business Performance Check tool on the ATO app to work out their own personal ratios and then compare them to the benchmarks, or manually calculate the various ratios and compare to the benchmarks. For businesses with ratios inside the benchmark ranges for their industry, the ATO notes that nothing else needs to be done. However, businesses with ratios outside of benchmarks are encouraged to look to see if there are any factors that can be improved.