Fringe Benefits Tax (FBT) is a tax employers pay on certain benefits provided to their employees (which also includes an employee’s family or other associates). This benefit could be in addition to or part of the employee’s salary or wage. There are many types of FBT, however we will touch on four of them in this article to provide some insight.
An Expense Payment Fringe Benefit is the most commonly encountered fringe benefit. An employer provides an expense payment benefit in two ways:
1. Where any employer pays a third party for expenses incurred by one of its employees
2. Where any employer reimburses one of its employees for expenses incurred by the employee
A Loan Fringe Benefit arises where an employee receives a loan from their employer and the rate of interest charged is less than the statutory rate of interest (currently sitting at 5.45%).
A Property Fringe Benefit arises when the employer provides the employee with property, either free or at a discount. Property can include goods (eg. clothing or television), real property (buildings and/or land), other property (shares or bonds) and even food and drinks.
A Residual Fringe Benefit covers employer-provided services or entitlements to use, but not acquire, an employer’s property (eg. one tonne ute).
Fringe benefits tax is separate to income tax and is calculated on the taxable value of the fringe benefits provided. The FBT year runs from 1 April to 31 March.
If you believe you could be providing any of the above-mentioned benefits and would like further information or would be interested in exploring one of the many other fringe benefit types, please don’t hesitate to contact our office.
Kristina Brown – Accountant