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Understanding Fringe Benefits Tax (FBT)

As an employer, it is important to be aware of your tax obligations, including Fringe Benefits Tax (FBT). FBT is a tax on certain benefits provided to employees and their associates, and is separate from income tax.

Who pays FBT?

The employer is responsible for paying FBT, and it is based on the taxable value of the fringe benefits provided to employees and their associates.

If the employer provides only salary and wages to employees, no FBT will be applicable.

When is the FBT year?

Businesses that provide fringe benefits to employees must lodge an annual Fringe Benefits Tax Return. The FBT year runs from 1 April of the previous year to 31 March of the current year, with lodgements and payments for the 2024 year having a due date of 21 May 2024, or 25 June 2024 if lodging through a tax agent.  

Following lodgement, employers may also be required to make quarterly FBT instalments as part of their Business Activity Statement (BAS) reporting.

Common examples of Fringe Benefits

There are various fringe benefits that could be provided to employees, some of the most common benefits are outlined below:

  • Allowing an employee to use a work car for private purposes.
  • Entertaining staff by way of lavish meals, drinks and entertainment
  • Paying an employees private expenses, such as gym membership or private health insurance
  • Providing entertainment by way of free tickets to concerts
  • Reimbursing an employee for non-deductible expenses such as children’s school fees.
  • Providing an employee with a discounted or interest free loan

FBT exemptions and concessions

There are several exemptions and concessions available for certain types of fringe benefits. These exemptions and concessions include:

  • Certain Electric vehicles: Read about The Benefits of Electric Vehicles for Business.
  • Minor benefits: Benefits that are less than $300 (including GST) in value and provided on an infrequent or irregular basis may be exempt from FBT.
  • Work-related items: Items that are primarily used for work purposes, such as laptops or tools, may be exempt from FBT. This includes portable electronic devices such as mobile telephones.
  • Car parking: Car parking provided on the business premises may be exempt from FBT if certain conditions are met. Read about car parking fringe benefits.
  • Certain Non-Entertainment benefits: Read about entertainment, FBT and tax deductibility.
  • Certain not-for-profit organizations, such as Public Benevolent Institutions (PBIs) and charities, may be eligible for FBT exemptions for some benefits provided to their employees.
  • Salary packaging an employee’s tax deductible expenses: Once a deductible expense is packaged, the employee cannot claim a further deduction in their own personal tax return.

Car Fringe Benefits

One of the most common fringe benefits we see is providing a car to an employee for their private use. The taxable value of a car fringe benefit is based on a number of factors, including the cost of the car, the type of car, the date it was acquired, and the logbook business use percentage of the vehicle.

There are several methods that can be used to calculate the taxable value of a car fringe benefit, including the statutory formula method and the operating cost method. Employers should be aware of the rules and requirements surrounding car fringe benefits to ensure compliance with FBT obligations. You can find details about Car Fringe Benefits here.

Car Parking Fringe Benefits & FBT

What's next?

FBT can be a complex tax that requires careful attention from employers to ensure compliance. By understanding the basics of FBT and taking advantage of exemptions and concessions where possible, you can reduce the amount of FBT that you are required to pay.

For assistance with your FBT obligations or to have your questions answered about any tax obligations, feel free to talk with usOur team at BLG Business Advisers are Wollongong Accountants who service right around Australia and are here to help you.

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*Please note that the above information is general advice only. We recommend you seek advice from a specialist relevant to your personal situation. This information is relevant at the time of publishing and is subject to change*
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