Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package. Superannuation contributions you make to a superannuation fund for an employee are specifically excluded from FBT.
The FBT year runs from 1 April to 31 March.
FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. Some examples of providing a fringe benefit might be:
- allowing an employee to use a work car for private purposes;
- giving an employee a low interest loan;
- paying an employee’s private health insurance policy;
- paying cleaning services for an employee’s private residence;
- reimbursing private expenses your employee has incurred (for example school fees or penalties);
- providing entertainment by way of food, drink or recreation to an employee;
- paying certain travel and accommodation expenses for your employee;
Some benefits are exempt from fringe benefits tax, for example:
- certain work-related items (portable electronic devices such as mobile phone, laptop);
- minor benefits that are less than $300 in notional taxable value;
- car parking benefits provided by a small business employer.
If you provide fringe benefits to employees, you must keep the necessary FBT records and work out whether you have to pay FBT. If you need to pay FBT, you must register for FBT, lodge an FBT return, pay FBT to the ATO and if required, report fringe benefits on your employees’ payment summaries.
The FBT rate for the year ending 31 March 2015 increases to 47%, while the capping thresholds for the FBT exemption and FBT concessions are unchanged. The capped amounts and FBT rebate rate will increase for the FBT year ending 31 March 2016.
If you have a liability during an FBT year you must lodge your return and pay the total FBT amount you owe for the FBT year ending 31 March by 21 May.