What is Fringe Benefits Tax?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to employees, their employees' family or other associates. If you provide a benefit to any employee or their associates in a different form to salary or wages, FBT may be applied.

FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. If an FBT return is required to be lodged the FBT year is from 1 April 2020 to 31 March 2021 and the return will be due for lodgement on 21 May 2021.

Some examples of fringe benefits include:

  • Allowing your employees to use a work car for private purposes
  • Holiday accommodation
  • Providing entertainment by way of free tickets to concerts
  • Reimbursement of employees' expenses (e.g. school fees)
  • Salary sacrifice arrangements
  • Giving your employee a loan with no interest or a low interest rate
  • Provide your employee with property (e.g. stock, property etc.)

If you think you are providing a benefit that relates to any of the above examples please contact us to discuss any potential FBT concerns. FBT is a complex area as some benefits are exempt from being taxed. The ATO have increased their audit activity in this area as an increasing number of employers have not complied with their obligations.

Exemption

Over past year there have been many changes and restrictions due to COVID. To adapt, you may have provided your employees different benefits to those you usually provide, and these may be exempt from FBT.

Generally, you do not need to pay FBT for:

  • items provided to employees to enable them to work from home (e.g. laptop or portable device)
  • emergency accommodation, food and transport
  • emergency health care.

The minor benefits exemption may also apply for minor, infrequent and irregular benefits under $300.

If you would like any further information or assistance in regards to Fringe Benefits Tax, please feel free to contact us on 1300 885 761.