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A Quick Guide on Fringe Benefits Tax for E-Commerce Businesses

Updated: Dec 12, 2019

Just like the relationship between the concept of e-commerce businesses and traditional business, e-commerce accounting still essentially follows the ins-and-outs of its traditional counterpart. From bookkeeping to invoicing, there is an abundance of traditional concepts and practices that are well-ingrained right into e-commerce accounting.

Out of all the different aspects of traditional e-commerce accounting that business owners should be mindful of, there’s one particular concept that is especially-significant: Fringe Benefits Tax (FBT).

Although you may know it primarily as a type of taxation that traditional businesses can apply for, FBT is also something that e-commerce businesses must adhere to. As budget deficits continue to increase, every e-commerce business is subject to being reviewed by competent authorities as to whether or not they should pay FBT.

To better understand how you can meet your fringe benefits obligations as an e-commerce business, we’ve prepared a quick guide based on FAQs about the process:

Should I be registered for FBT?

The rule of thumb for FBT is that you are eligible if you:

  1. Have employees in your business (including your directors)

  2. Provide said employees with cars, car parking, entertainment allowance, employee discounts, private expense reimbursements, and the like

These employee benefits are commonly referred to as “fringe benefits,” which are essentially the subject of taxation in the FBT. Should you fall under both the previously-mentioned classifying factors, then it is safe to assume that you will have to gather the necessary details and pay for FBT. Even if you have remote employees in your e-commerce business, you will still have to account for the fringe benefits you provide for them as well.

What particular items are exempt from FBT?

Certain items, such as mobile phones, tablets, laptops, portable printers, tools of the trade, and any other minor and infrequent benefits that fall under the sub-$300 category are exempt from FBT. However, it is worth noting the exemption will only apply if the aforementioned benefits are both minor and infrequent.

Is there any way I can manage my vehicle log books better for FBT tracking?

If you’re an employer who has 20 or more cars destined for work-related purposes (which are also known as “tools of trade” cars), then you can use the “simplified method” for easier management. Here are the necessary conditions needed to be fulfilled:

  • Valid log books that have been kept for at least 75 per cent of the cars in the logbook year

  • The employer must choose the make and model of the car

  • Each fleet car has less value than the ‘luxury car’ limit upon purchase (which has been slated at $65,094 in 2018 to 2019)

  • The cars aren’t provided under a salary packaging arrangement or employee remuneration package

Should I lodge an FBT return even if there is no FBT payable?

If you do not have any FBT that is payable, then you are legally permitted not to lodge an FBT return. For practicality’s sake, however, it is best that you still lodge an FBT return so that you can reduce the ATO’s audit window to only three accounting years.

Whether you may be a new e-commerce business or one that has been established for quite some time, it is vital to make the necessary FBT payments. By following this quick guide, you can keep the image of your e-commerce business clean and avoid any harsh penalties for non-payment after an audit in the future.

If you’re looking for a professional e-commerce accountant on the Gold Coast, get in touch with us to see how we can help.

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