Why the end of FBT year is your excuse to get spending

It’s that special time of year again. No, not Christmas. Not that one day in September (Victorian thing). Not tax return time. This is even better, at least we think so. The end of FBT year is your excuse to start looking at ways to spend what is remaining of your salary packaging allowance. It is also when your salary packaging allowance starts all over again for another year of saving big by accessing your pre-tax income. The FBT year is the fringe benefits tax year which runs every year from the 1st of April to the 31st of March. Here’s why you need to make sure you focus on your salary packaging arrangements right now. The following is for anyone who has a cap entitlement because they work in the Public Health, Not-For-Profit and Charity sectors.

No rolling over funds

These metaphors write themselves, but no seriously, don’t just roll over and ignore unused salary packaging funds, because it will impact what you can do in the new FBT year. If you have any balance in your salary packaging ’account’ at the 31st of March, the balance amount will reduce your salary packaging cap limit by that amount in the new FBT year. For example, let’s say you have a balance of $250 on your salary packaging card at the 31st of March, this amount will reduce your available cap in the new FBT Year. That means if you work in the Public Health sector and your cap is $9,010 each year, your cap will only be $8,760 in the new FBT Year. The same goes for your Meal Entertainment cap, if there’s any balance remaining at the end of the FBT Year, your cap in the new FBT Year will reduce by the balance. So, it is really important in the lead up to the end of the FBT Year that you know what your balance is at all times. If you don’t already know how to continually check your balance, you should check with your current provider about how you do this. If you have a Novated Lease as part of your salary packaging arrangement, there’s nothing for you to do regarding the funds held as these will transfer over to the new FBT Year.

Splash that tax-free cash

You’ve been extremely wise and thrifty to take up salary packaging, but now is not the time to be shy about throwing those tax-free dollars around. If you have a remaining balance and need to assign some last-minute claims, use it towards expenses you haven’t previously claimed. You may have already allocated your salary packaging benefits to sensible and regular expenses like mortgage, rent, childcare fees or bills. But what about other options like one-off purchases? Have you considered salary packaging a smartwatch? Check out our previous blog on setting that up. The work year may have just started, but it’s never too early to pay for a holiday. Remember you can claim holiday accommodation. What about hitting the gym? There’s a range of memberships and subscriptions you can buy with your salary packaging allowance. If you still have meals and entertainment funds left, pick an expensive restaurant and enjoy. Just make sure you use your meals and entertainment card or send in those claim forms (if your salary packaging provider allows claims) before the 31st of March.

End of FBT year

Claim a few days BEFORE the 31st of March

Even though the end of FBT is the 31st of March, financial transactions and the required administration mean it can take several days for salary packaging claims to go through the system. Check with your salary packaging provider, but round these ‘ere parts, the end of FBT year is unaffectionately known as Mad March. To make absolutely sure your claim goes through by the end of the FBT year, we recommend submitting claims as early as possible but no later than the 27th of March. This goes for salary packaging cards as well. Even though the transaction happens instantly with the vendor, it can take a few days for your salary packaging balance to adjust. All salary packaging providers have different cut-off dates for when you can make your final expense claims, so check with them.

Why is the FBT year different to the financial year?

Good question. The regular financial year or tax year runs from the 1st of July to the 30th of June. The FBT year runs from the 1st April to the 31st March. This was decided by the tax office as a way of reducing the pressure of having to do fringe benefit reporting on top of the usual taxation chaos that we all know as EOFY. 

Want to know more about the end of FBT year?

If you need help with your FBT claims or you have any queries about salary packaging in general, including Novated Leasing, please call to talk to a real person at The Salary Packaging People. If you’re an employer and not currently happy with your salary packaging services, now is the best time to switch to a truly personable provider. Contact us online or call 03 5229 4200.