If you run a small business and employ staff, then you do, of course, have to account for their earnings and send regular returns to the ATO. Generally, you need to deduct their tax dues at source and pay these to the authorities and make sure that each individual receives documentation that keeps them up to date with their affairs. Yet this may not be the end of your obligations as far as staff taxation is concerned, as you may need to take into account what the government euphemistically calls their fringe benefits. What is involved, and why do you need to be particularly attentive at a certain time of year?
On the Fringe
In order to collect the maximum amount of money for the government, people are taxed on the amount of money that they earn. This is set down in legislation, and after a certain amount that is designated to be 'free', an individual will pay a progressively increasing amount, which is deducted at source. The ATO is, however, always on the lookout for ways to tax the individual, should they receive benefits in kind that are not in the form of cash. These are deemed to be 'fringe' benefits, and a number of complex laws exist to cover this area.
For example, if your business owns or leases a car or truck and it is available for one or more employees to use for their private travel, then this is considered to be an advantage for that employee, and fringe benefits tax may be payable. The employee does not need to use the car, per se, but it simply needs to be 'available' for their private use, and this is determined by its location in relation to the employee. For example, if it is stored or kept near to the residence of the employee on a particular day, then it is deemed to be available on that day and tax may be payable accordingly. As you may imagine, there are many different rules involved here, and the situation can sometimes be difficult to determine.
If you have a number of employees and want to show your appreciation for them, then it is traditional to throw some kind of party at around Christmas time. You may buy gifts for these employees as well, and all of this must be considered in terms of your obligations for fringe benefits tax. Once again, there are many different rules here, and some of these relate to where the party is held and whether or not it was on your business premises.
Getting It Right
To make sure that you are always paying the right amount to the ATO, especially when it comes to fringe benefits, talk with a tax accountant service as soon as possible.