Your employees are the lifeblood of your business. They have used their experience and talents to take what you started further than it ever could have gone before. Often, they can become like family. But when disaster strikes and your employees are impacted by it, providing help is the first thing on our mind.
Normally, providing benefits to employees for non-work-related activities, such as non-work-related hotel stays, or loaning a car for private use, would be subject to fringe benefits tax (FBT). However, in emergencies, like natural disaster, there are some exemptions to FBT when you provide certain levels of relief for your employees.
FBT exemptions for emergencies
During an emergency situation certain assistance you provide to your employees is exempt from FBT in order to enable you to assist them. FBT exempt assistance includes:
- First aid or other emergency health care
- Temporary repairs
- Emergency meals, food supplies, clothing, temporary accommodation, transport or use of household goods.
- Other similar forms of assistance.
This allows your business to provide immediate, emergency assistance for your employees when they have been affected by natural disasters. The FBT exemptions will also apply in other emergency situations including:
- Serious illness
- An accident
- Armed conflicts
- Civil disturbances
If your employee has been affected by any of those emergencies, feel free to provide aid. As long as the assistance you provide is covered under the FBT exemption you will not be charged FBT.
What type of assistance is not exempt from FBT?
Even under an emergency situation there are some limits to the FBT exemptions. Most of the time, exemptions do not apply if the benefit is long-term. For example, if you provide a new house or a new car to replace one destroyed as a result of the emergency, you will have to pay FBT. Some health care provided may also not be exempt from FBT. There are certain special requirements in regards to health care. You should talk to your accountant to determine whether the assistance you want to provide is FBT exempt.
Tax deferrals in disaster affected regions
As natural disasters continue to occur across Australia this year, the ATO is offering affected businesses a tax deferral. The last thing any business owner thinks about during a natural disaster is tax. They are more worried about their friends, families, employees, and how to get their business back up and running again. Fortunately, the ATO has applied an automatic tax deferral of 2 months to every business in an impacted postcode.
With this deferral, you receive a 2 month extension to submit your Business activity statements, allowing you to use the time to rebuild your business and get back on track. The ATO has also fast tracked any due refunds for businesses in the impacted areas. However, as an employer, you will still be required to meet your ongoing super guarantee obligations for your employees.
If your employees are caught up in an emergency situation it is only natural that you want to help them. Fortunately, you can without being hit with FBT. If your business has been affected by natural disasters you can call the ATO’s disaster hotline at 1800 806 218 for advice and help.
You should also contact your accountant regarding the support you can receive and provide if you or your employees have been affected by a natural disaster or other emergency. Talk to Link Advisors today for the best accounting advice.