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Tax Facts - Fringe Benefit Tax

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A Fringe Benefit is a benefit provided to an employee (or their associate) because that person is an employee. Benefits can be provided by an employer, an associate of the employer, or by a third party under an arrangement with the employer. An employee can be a current, future or former employee.

Fringe Benefits Tax (FBT) is a tax paid on these benefits that employers provide in place of salary or wages. FBT is separate from income tax and is based on the taxable value of the various fringe benefits provided. The FBT year runs from 1 April to 31 March.

Various categories of fringe benefits apply, and specific valuation properties apply to each category. The categories are:

  • Car fringe benefits;
  • Loan fringe benefits;
  • Debt waiver fringe benefits;
  • Expense payment fringe benefits;
  • Housing fringe benefits;
  • Board (meal) fringe benefits;
  • Airline transport fringe benefits;
  • Living-away-from-home allowance fringe benefits;
  • Entertainment provided by a tax-exempt organisation;
  • Meal entertainment fringe benefits;
  • Car parking fringe benefits;
  • Property fringe benefits;
  • Residual fringe benefits.

The following are not fringe benefits:

  • Payments of salary or wages;
  • Approved employee share acquisition schemes;
  • Employer contributions to complying superannuation funds;
  • Eligible termination payments (for example, a company car given or sold to an employee on termination); or
  • Certain benefits provided by religious institutions to their religious practitioner.

You can reduce the amount of FBT you pay by:

  • Replacing fringe benefits with cash salary;
  • Providing benefits that your employees would be entitled to claim as an income tax deduction if they had paid for the benefits themselves;
  • Providing benefits that are exempt from FBT; or
  • Using employee contributions.

See the ATO website for the Fringe Benefits Tax Guide .

 

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