Fringe Benefits Tax

Fringe benefits are an important part of running a business and can be a useful way of attracting quality staff. However, if you're going to provide fringe benefits to your staff, you need to be aware of your taxation obligations along with any current changes made by the ATO.

How does Fringe Benefits Tax work?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees – including their employees’ family or other associates. It may help to reduce the employee's taxable income, and while not considered actual salary is provided in addition to, or part of, their salary or wages package. Typically provided through salary sacrifice or as part of an employee's salary packaging.

If you are a director of a company or trust, benefits you receive may be subject to FBT.

What is a Fringe Benefit?

Benefits can take the form of but are not limited to:

• Company car: this can be owned or leased by the company and made available for private use. It includes sedans, SUVs, luxury vehicles, panel vans or utilities (except vans and utilities with a carrying capacity of one tonne or more)
• Car parking (subject to certain conditions)
• Housing: this could be a house, apartment, flat, caravan or accommodation in a hotel or on a boat
• Board: where the employee is entitled to at least two meals a day
• Low interest loans
• Private health insurance
• Living-away-from-home allowance (LAFHA): where the employee is temporarily required to live away from their normal place of residence
• Gym or health club membership
• Entertainment: meals, food, drink, movie tickets, concerts, shows, events etc.
• School fees and other childcare costs
• Residual benefits: where the employer provides a privilege, service or facility that does not come under a specific type.

Providing a benefit to employees in this way is perfectly legal and is a common form of reimbursement.

H3: How is FBT in Australia calculated?

FBT is separate to income tax and is calculated on the total taxable value of the fringe benefits provided. The amount of tax payable varies depending on the type of benefit. An FBT year is 1 April to 31 March.

We can help your business with preparing, reporting, lodging and paying FBT. We'll answer your questions, help you comply with all your obligations and streamline the whole process for you. We can assist you to prepare Fringe Benefits tax for your business. Talk with us today.

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