FIVE TIPS TO MAXIMISE FRINGE BENEFITS TAX

Written on the 16 April 2015

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.


Latest News

APOLLO REVS UP ITS RESULTS

APOLLO Tourism & Leisure (ASX: ATL) has hit its profit forecast in its maiden result as a publicly traded company...

JASMINE YARBROUGH AND TAMIE INGHAM TAKE MARA & MINE TO HOLLYWOOD

MARA & MINE entrepreneurs Jasmine Yarbrough and Tamie Ingham (pictured left and right respectively) slipped in...

HUGE PROFIT SPIKE FOR HELLOWORLD HEALS MERGER WOUNDS

HELLOWORLD (ASX: HLO) gripped the share market this morning after its announcement of a whopping 880 per cent increas...

PROFIT DROP AT SERVCORP

SERVICED office company Servcorp has seen its profit fall, citing New York City, Singapore and Saudi Arabia as the pr...

Related News

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

TEST DRIVE A POST GRAD AT BOND

THERE'S only one way to really move your career into the fast lane, says Bond University, and 'test driving...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter