Robson Chartered Accountants Business & Finanical Advisors - Gosford - Central Coast - NSW

Fringe Benefits Tax: Are you in line for an ATO audit?

The Christmas Party has been and gone, and so has the end of the FBT year. Now we’re left with the accounting for the fun we’ve had!

FBT compliance is a serious business with harsh penalties for failure to report or wreckless record keeping. Robson Partners Client Service Manager, Emilie Pearson looks at the 2 main methods to assist SME owners regarding entertainment expenses.

The two main methods of entertainment FBT calculation are – the Actual Method and the 50/50 Split Method.

Using the Actual Method you look at each expense individually to determine:

• If the expense can be considered minor (less than $300) and infrequent
• Who the expense benefited and the amount attributable

The Actual Method is very effective as the ability to disregard amounts less than $300 covers many of the small expenses, but it can be quite time consuming if you have a large number to sort through.

Under the 50/50 Split Method, all entertainment amounts go in the pot. This means that 50% of this amount becomes the taxable value of the entertainment fringe benefits provided. However, by using this method you lose the ability to apply the minor and infrequent exemption - in other words, one in – all in.

It’s worth considering which method will best suit your business in terms of resources and FBT liability minimisation.

Click here to talk to Emilie and find out what your FBT obligations are.