How can you effectively reduce Fringe Benefits Tax?

Easy ways to effectively reduce fringe benefits tax

We know owning a small business means you need to be across all the financial aspects and finding ways to reduce your fringe benefits tax (FBT) is essential.

The first step is to understand what a fringe benefit is. Basically, it’s a ‘payment’ to an employee, but in a different form to salary or wages.

Let’s break down FBT for you

Fringe benefits tax can be great, but it is also important to know why you would want to reduce it.

The main reason is because additional costs, like FBT, can pop up every now and then, which is what businesses want to limit.

You need to be proactive when it comes to FBT and ensure you are keeping an eye on your payments. This helps to guarantee it is still as beneficial for the employer as it is for the employee.

Knowing what is and isn’t classified as a fringe benefit is also key to reducing your FBT.

Some easy examples of payments that can be classified as a FBT is paying an employee’s gym membership or giving benefits under a salary sacrifice arrangement with an employee.

Payments that aren’t categorised as fringe benefits include employer contributions to complying super funds and benefits provided to volunteers and contractors.

How do I reduce fringe benefits tax within my business?

Here are some quick and easy steps that your business can take to reduce fringe benefits tax. Some examples include:

Replacing fringe benefits with actual salary
Providing benefits that your employees would be entitled to claim as an income tax deduction if they had paid for the benefits themselves
Providing benefits that are exempt from FBT
Using employee contributions – generally a payment by the employee to the employer or the person who provided the benefit.

Are you still unsure how to reduce your fringe benefits tax? We’re here to help, get in touch today!

Our team will help you work out your FBT for your business and find all the ways you can reduce it.

We are experts in budgeting, accounting, and financing for business and can assist you in understanding your taxation requirements.