Fringe Benefits Tax + Advice

Fringe Benefits Tax has been around since 1986.

Whilst originally conceived to target cars, travel and restaurant meals for executives, business owners should be aware of the obligations and opportunities that FBT poses.

As a business owners, you could be liable for Fringe Benefits Tax by providing benefits to your employees, or even to yourself.

Rewarding your team for their contribution is one thing, but when that constitutes a fringe benefit, there’s some vital information that you need to know about your tax obligations.

A fringe benefit is a ‘payment’ to an employee, but in a different form than salary or wages.

It’s a non-cash benefit provided to an employee’s family or other associates.  Fringe Benefits Tax can apply even if the benefit is provided by a third party.

Suppose you’re a director of a company and pay yourself as an employee – if that is the case, then any benefits you incur, in addition to your salary, will be considered fringe benefits.

Examples of fringe benefits include:

• Allowing an employee to use a work car for private purposes;
• Giving an employee a discounted loan;
• Paying an employee’s gym membership;
• Providing entertainment by way of free tickets to concerts, football gams etc.;
• Reimbursing an expense incurred by an employee, such as school fees; and
• Giving benefits under a salary sacrifice arrangement with an employee.

Fringe Benefits Tax is separate from Income Tax and is calculated on the taxable value of the fringe benefit.

It is a require of the employer to self-assess their fringe benefits tax liability for the FBT year (1st April – 31st March) and lodge a Fringe Benefits Tax Return.

Employers can generally claim an income tax deduction for the cost of providing fringe benefits and the FBT they pay.  Employers can also generally claim GST credits for items provided as fringe benefits.