There's Fringe Benefits on my Tax

Why does my Income Statement show Fringe Benefits?

Preparing your 2024 income tax return and you see "reportable fringe benefits" on your income statement.  What the hell is that? Do I pay tax on it?, is it included in my Income? Is it Tax deductible?  There's some obvious questions that run through our heads when we forst see this.  Let's break it down and see what it really means to you and your tax return.  

1. What Are Fringe Benefits?
2. How Are Fringe Benefits Taxed?
3. Reportable Fringe Benefits on Your Income Statement
4. Example: Car Fringe Benefit
5. Why Is This Important?
6. Gotax makes it Simple

What Are Fringe Benefits?

Fringe benefits are Benefits provided by your employer that are not part of your regular salary or wages. These can include a company car, health insurance, gym memberships, or meal allowances. While these benefits are great, they come with certain tax implications.

How Are Fringe Benefits Taxed?

Fringe benefits are subject to Fringe Benefits Tax (FBT), which is paid by your employer. You don’t pay this tax directly. It WILL NOT effect your tax refund position.  Although the value of the benefits you receive can still impact your financial situation.

Reportable Fringe Benefits on Your Income Statement

If the total taxable value of the fringe benefits you receive exceeds $2,000 in a year, your employer must report this amount on your income statement as the "reportable fringe benefits amount." This amount is "grossed up" using a specific rate to reflect the pre-tax value of the benefits. For the 2024 FBT year, the Type 2 gross-up rate is 1.8868.

Example: Car Fringe Benefit

Your employer provides you with a company car, which you use for both work and personal purposes. The taxable value of this car fringe benefit for the year is $8,000. Here's how it works:

• Gross-Up Rate: For the 2024 FBT year, the Type 2 gross-up rate is 1.8868.
• Grossed-Up Value: $8,000 * 1.8868 = $15,094.40

This grossed-up value of $15,094.40 will be reported on your income statement as a reportable fringe benefit amount. While this amount is not added to your taxable income for calculating your income tax, it is considered when assessing your eligibility for various tax offsets and government benefits.

Why Is This Important?

The reportable fringe benefits amount can affect your entitlement to various government benefits and obligations. For example, if your income, including the reportable fringe benefits, exceeds certain thresholds, you may be liable for the Medicare levy surcharge or have reduced eligibility for family tax benefits.

Gotax makes it simple

Understanding the tax treatment of fringe benefits can be complex, but it's crucial for ensuring you meet your tax obligations and maximize your entitlements. Always keep detailed records of the fringe benefits you receive and consult with a tax professional if you're unsure about any aspect of your tax situation.

For a seamless and stress-free tax return experience, consider using gotax.com.au, Australia's easiest online tax return system. They can help ensure you maximise your tax deductions and achieve the best possible outcome for your income tax return.

Using an efficient tool like Gotax.com.au can make the process of completing your income tax return much easier, we make the complex stuff really easy.  

If you have any more questions or need further assistance, feel free to ask!  Just use our latest and greatest GotaxAi system to assist with your questions.