On the occasion that you are required to travel overnight for work, you may be eligible to receive a travel allowance from your employer for accommodation, food, drink or incidental expenses. The reasonable amount of travel expenses is updated yearly and is based on job type and salary. From this allowance, tax deductions are to be withheld unless specified otherwise. Exceptions are:
you’re expected to spend all of the travel allowance paid
the amount and nature of the travel allowance is kept separately in accounting records
the travel allowance is not for overseas accommodation
the amount of travel allowance paid is less than, or equal to the reasonable travel allowance rate.
Where the exceptions apply, your employer won’t withhold tax and will include the allowance on your payslip.
It is important to keep detailed records of your travel expenses, length of trips and if it was overseas or domestic travel. If you need to claim anything from these trips in the future, you will need the appropriate documentation that covers all expenses, not just excess amounts. Vehicle, food, accommodation and incidental expenses need to be documented on a case by case basis:
With travel allowance
Written evidence need to be supplied for overseas accommodation
Travel diary need to be supplied on overseas trips of 6 nights or more in a row
Without travel allowance
Written evidence need to be supplied on all domestic and overseas travel
Travel diary need to be supplied on domestic and overseas trips of 6 nights or more in a row
For businesses in Australia, providing fringe benefits to employees can be a valuable way to attract and retain talent, as well as incentivise performance.
However, employers need to understand their obligations regarding Fringe Benefits Tax (FBT). The Australian Taxation Office (ATO) administers FBT, a tax on certain non-cash benefits provided to employees in connection with their employment.
Let’s explore the types of fringe benefits subject to FBT to help businesses navigate this complex area of taxation.
Car Fringe Benefits
One common type of fringe benefit is the provision of a car for the private use of employees. This includes company cars, cars leased by the employer, or even reimbursing employees for the costs of using their own cars for work-related travel.
Housing Fringe Benefits
Employers may provide housing or accommodation to employees as part of their employment package. This can include providing rent-free or discounted accommodation, paying for utilities or maintenance, or providing housing allowances.
Expense Payment Fringe Benefits
Expense payment fringe benefits arise when an employer reimburses or pays for expenses incurred by an employee, such as entertainment expenses, travel expenses, or professional association fees.
Loan Fringe Benefits
If an employer provides loans to employees at low or no interest rates, the difference between the interest rate charged and the official rate set by the ATO may be considered a fringe benefit and subject to FBT.
Property Fringe Benefits
Providing employees with property, such as goods or assets, can also result in fringe benefits. This can include items such as computers, phones, or other equipment provided for personal use.
Living Away From Home Allowance (LAFHA)
When employers provide allowances to employees who need to live away from their usual residence for work purposes, such as for temporary work assignments or relocations, these allowances may be subject to FBT.
Entertainment Fringe Benefits
Entertainment fringe benefits arise when employers provide entertainment or recreation to employees or their associates. This can include meals, tickets to events, holidays, or other leisure activities.
Residual Fringe Benefits
Residual fringe benefits encompass any employee benefits that do not fall into one of the categories outlined above. This can include many miscellaneous benefits, such as gym memberships, childcare assistance, or gift vouchers.
Compliance With FBT Obligations
Employers must understand their FBT obligations and ensure compliance with relevant legislation and regulations. This includes accurately identifying and valuing fringe benefits, keeping detailed records, lodging FBT returns on time, and paying any FBT liability by the due date.
Fringe Benefits Tax (FBT) is an essential consideration for businesses that provide non-cash benefits to employees.
By understanding the types of fringe benefits subject to FBT, employers can ensure compliance with tax obligations and avoid potential penalties or liabilities.
Seeking professional advice from tax experts or consultants can also help businesses navigate the complexities of FBT and develop strategies to minimise tax exposure while maximising the value of employee benefits. Why not start a conversation with one of our trusted tax advisers today?