Learn more about … Fringe Benefits Tax

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

According to the fringe benefits tax (FBT) legislation, a fringe benefit is a benefit provided in respect of employment. This effectively means a benefit is provided to somebody because they are an employee.

The terms benefit and fringe benefit have broad meanings for FBT purposes. Benefits include rights, privileges or services. For example, a fringe benefit may be provided when an employer:

·         allows an employee to use a work car for private purposes

·         gives an employee a cheap loan

·         pays an employee’s gym membership

·         provides entertainment by the way of free tickets to concerts

·         reimburses an expense incurred by an employee, such as school fees

·         gives benefits under a salary sacrifice arrangement with an employee

As an employer, you pay FBT irrespective of whether you are a sole trader, partnership, trustee, corporation, unincorporated association, government or government authority.

The following checklist will help you work out if you are already providing a fringe benefit to your employees. If any of the following apply, you may have an FBT liability.

·         Do you make cars or other vehicles owned or leased by the business available to employees for private use, including a car garaged at the employee’s place of residence?

·         Do you provide loans at reduced interest rates to employees?

·         Have you released an employee from an owed debt?

·         Have you paid for, or reimbursed, a non-business expense incurred by an employee?

·         Do you provide a house or unit of accommodation to your employees?

·         Do you provide employees with living-away-from-home allowances?

·         Do you provide entertainment by the way of food, drink or recreation to your employees?

·         Do any of your employees have a salary package arrangement in place?

·         Have you provided your employees with goods at a lower price than they are normally sold to the public?

If you become aware that you have provided a fringe benefit, your entity must lodge an FBT return (similar to a tax return).  The FBT year runs from 1 April to 31 March and returns are due to be lodged by 21 May.

 (Source: ato.gov.au)