Australians can experience a range of natural disasters, such as floods, bushfires, tropical cyclones, severe storms and even earthquakes. These events can cause devastation to communities and financial hardship for individuals and businesses.
While FBT may not be at the forefront of your mind when helping your employees after an emergency, it can result in potential exemptions depending on the assistance provided.
It is worthwhile to know what kinds of benefits you, as a business owner, can provide for different emergencies that will be excluded from FBT. Businesses that provide benefits to employees during an emergency situation are likely to have assistance costs be exempt from fringe benefits tax (FBT).
Exemptions will apply to benefits you provide to employees who are being impacted by or will be potentially impacted by:
- A natural disaster such as a bushfire, flood or cyclone.
- An accident such as a car accident.
- A serious illness such as cancer.
- An armed conflict such as a war.
- A civil disturbance such as a riot.
The benefits you provide to your employees that can be exempt from FBT include health care, temporary repairs or emergency needs such as food supplies, clothing, accommodation, transport or household goods. These can be of great use to employees looking to get back on their feet.
Short-term benefits you provide to an employee, such as temporary repairs to damaged property due to a natural disaster, are exempt from FBT. However, long-term employee benefits after an emergency event will not be exempt, such as a replacement car, new house or ongoing renovations.
When providing health care, certain requirements must be followed. FBT exemptions only apply to health care provided:
- For an employee of yours or from a related company.
- On your premises or the premises of a related company
- By a company doctor at an accident site.
- At or near an employee’s worksite.
If you decide to pay for your employee’s ongoing medical or hospital bills, then the FBT exemption will not apply.
The benefits costs would be deductible to the employer but not assessable to the employee and will not appear as part of their salary and wages on their payment summary.
These benefits can be of use to not only the individual employees but to your business as well. Regarding FBT, exempt benefits can be a great way to lower the tax bill. They also provide a way to assist your employees during times of great hardship.
However, to ensure you’re maximising your FBT benefits potential, consult with a registered tax agent or adviser for the right information and assistance in handling these matters.