Fringe Benefit Tax (FBT) is a Federal Government tax imposed on employers on the value of certain fringe benefits that have been provided to employees in respect of their employment. The FBT year runs from 1 April to the following 31 March. The current rate of FBT is 49% (2015/2016) and this is calculated on the grossed-up value of the benefit.
Fringe benefit tax payments are different to salary or wages. It's a benefit provided with respect to employment. There are a variety of benefits and these include entertainment, private use of a company car, cheap loans provided to employees, gym memberships, school fees and child care fees. In addition, most employers/salary packaging providers will allow you to claim personal expenses which have been paid in the last 6 months.
Therefore, for those commencing employment in January or towards the end of any FBT year, you should look to claim your full entitlement for the FBT year which ends on 31 of March allowing you to receive $9,094. 80 plus any meals tax-free up to this date. Often referred to as FBT, the Fringe Benefit Tax is imposed on non-cash benefits that employees receive from employers. The tax first came to be in 1986 with the release of the Fringe Benefits Tax Assessment Act of 1986. The ATO can be a little vague in describing Fringe Benefit Tax (FBT): “FBT is paid by employers on certain benefits they provide to their employees or their employees’ associates (typically family members) in respect of the employee's employment. FBT is separate from income tax and is based on the taxable value of the fringe benefits provided”.
Even though the employer is the one that pays a Fringe Benefit Tax, the employee must still report it on their PAYG statement if the benefits exceed $2,000. Despite the requirement to report the benefits, the employee will not be responsible for paying any taxes on the items. Despite these benefits, there are some important things to bear in mind when considering salary packaging. Fringe benefits paid for using salary sacrificing may be subject to Fringe Benefit Tax, although there is a range of exceptions included for employees of not-for-profit organisations and public hospitals.
The Tax Office has several different categories of fringe benefits, which include:
- car fringe benefit
- debt waiver
- loan fringe benefit
- expense payment
- housing fringe benefit
- living away from home allowance
- airline transport
- board (accommodation)
- tax-exempt body entertainment
- car parking
- property fringe benefit, and
- residual benefits (that is, other benefits not covered by the above).
If you need more information in regards to this please call 1300 488 330 and talk to our professionals at Absolute Accounting Solutions.
DISCLAIMER: All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor.