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ATO outlines common FBT mistakes

Fringe benefits tax (FBT) is a tax an employer pays on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package. Fringe benefits tax is separate to income tax and is calculated on the taxable value of the fringe benefits provided.

Recently, the Australian Tax Office has released information for business owners which outlines some of the most common FBT mistakes made over recent financial years, as there are some misconceptions surrounding FBT exemptions of certain benefits provided to employees.

A condition of an FBT exemption is that the benefit provided is primarily used to enable the employee to do their job. In determining a benefit’s primary use, the Tax Office considers the employee’s ‘intended use’ at the time the benefit is provided.

There are also benefits that an employer can provide that are already deemed FBT exempt, such as work-related items like laptops, computer software and mobile phones.  

Some of the circumstances the ATO has advised businesses to be wary of include:

Posted on 19 September '16 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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