Understanding Fringe Benefits Tax
What is the Fringe Benefits Tax?
The Fringe Benefits Tax is a tax that is a part of the Australian tax system and one that exists on non-cash benefits that are a part of the employment. The tax is paid by the employer and not by the worker, but it also means that there needs to be a benefit that is given to the employee or a partner of the employee. The origins of the tax go back to 1986 in an act that was entitles the Fringe Benefits Tax Assessment Act.
A Fringe benefit is one that adds to or supplements the money that an employee is paid such as healthcare or a car for business. The employee will benefit as well from the benefits that are out there, and there are many other ways that you can see that the benefits are for employees only. What that means is that the fringe benefit cannot be for a contractor but can only be for an employee. There are many kinds of benefits that are listed as well in the legislation those include the car, the loan, housing and many others for tax. For each benefit that is outlined, there is a value for taxation that is paid by the company.
The taxation rate for fringe benefits is 47%, and that is the highest rate of taxation that can be paid. There is also a Medicare levy that needs to be paid that is about 2%; the tax rate, which has been applied to the gross total to ensure that it is possible to have an affordable rate for the benefits outlined by the government.
There are many other benefits as well that are on this list like a salary, housing, allowances, relocation expenses, minor benefits, protective clothing, tools, mobile phones, and laptops. With all of these benefits, the employee has no contribution that they have to make, and that also means that they do not have to worry about the taxation of the fringe benefits.
What Do I Need to Know about the Fringe Tax Benefit?
The Fringe Tax Benefits are something that you need to understand if you are a business owner. For every fringe benefit, it is important to make sure that you understand the way that you are going to have that tax applied. By making sure that you are familiar with the tax brackets, you will be able to know that you are accounting for the expenses and are allocating the money to record and pay the tax on a regular basis.
When you are working with your account, you will be able to focus on the setting aside of money to pay the Fringe Tax Benefits. When you are working with your company accountant, you will be able to know that you are going to be correctly filing and that you are also maintaining your money as well as for your company. There are many options that are out there for you that will empower you to be successful.
To have a better understanding on Fringe Benefits Tax, it is best to talk to a certified and reliable accountant, like the ones in Femia Accountants. Call them today.