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ATO Publishes New FBT Guide

by Jason Gorringe,, London

22 October 2007

The Australian Taxation Office (ATO) has published a new guide to help small business employers to understand how the tax on fringe benefits and entertainment works, and to decide whether or not they may have to pay Fringe Benefit Tax (FBT).

The guide is intended for use by small business employers who sometimes provide their employees and/or their associates with food and drink, gifts or leisure activities. Depending on the circumstances, the provision of such items may be classified as providing entertainment, and employers may therefore have to pay fringe benefits tax (FBT).

The guide is broken down into several sections, which help employers to: decide whether they are providing entertainment, to calculate the taxable value of entertainment benefits using the actual method, and keep records so that they can calculate FBT payable.

It also explains how employers can reduce FBT liability, possibly to nil, and also provides many examples of the most common situations in which entertainment is provided by small businesses.

Fringe benefits provided by income-tax-exempt organisations are treated differently, and are therefore not explained in the guide.

There are different rules for tax-exempt bodies, which should refer to guides on FBT and entertainment for non-profit organisations, or FBT and entertainment for government, the ATO explained.

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