Fringe benefits tax (FBT) is a tax employers pay 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.
If you are a director of a company or trust, benefits you receive may be subject to FBT.
Fringe benefits tax is separate to income tax and is calculated on the taxable value of the fringe benefits provided.
Types of fringe benefits: (Please note there are specific valuation rules for each category)
- Car fringe benefits
- Car parking fringe benefits
- Entertainment and fringe benefits
- Expense payment fringe benefits
- Loan fringe benefits
- Debt waiver fringe benefits
- Housing fringe benefits
- Board fringe benefits
- Living away from home allowance fringe benefits
Do you need to pay FBT?
You may be required to pay fringe benefits tax (FBT) if you provide certain fringe benefits to an employee (or their associate) in respect of employment. An employee can be a current, future or past employee, or a director of a company or trust.
You will need to pay FBT even if the benefit is provided to an associate of your employee or by a third party under an arrangement with you.
Examples of fringe benefits include:
- allowing your employee to use a work car for private purposes
- giving your employee a discounted loan
- paying an employee’s gym membership
- providing entertainment by way of free tickets to concerts
- reimbursing an expense incurred by your employee, such as school fees
- giving benefits under a salary sacrifice arrangement with an employee.
Some employers, including charities, need to assess the status of their workers when working out their FBT liability. Generally, benefits provided to volunteers and contractors don’t attract FBT.
You must self-assess your own FBT liability each FBT year (1 April to 31 March) and lodge an FBT return before the due date.
How to register for FBT
You need to register for fringe benefits tax (FBT) once you have determined that you are providing fringe benefits and have to pay FBT. To register click here.
You must register for FBT and lodge an FBT return if you have a liability during an FBT year (1 April to 31 March).
FBT exemptions and concessions
Some benefits are exempt from fringe benefits tax (FBT) or receive concessional treatment (for example, living away from home allowance). Specific exemptions and concessions apply to some non-profit organizations.
If you have any questions call Taxwise Australia on 08 9248 8124. If you enjoyed this article about fringe benefits tax, you may also want to read up on the Good’s and Services Tax (GST).