Fringe Benefits Tax (FBT) is a tax paid by employers on particular benefits they provide to their employees instead of salary or wages. Benefits can be provided by an employer, an associate of an employer, or a third party arrangement with an employer to their employee, employees’ family or other associates. If you are a director of a company or trust, benefits you receive may also be subject to FBT.
FBT is separate from income tax and is calculated on the taxable value of the fringe benefits provided.
TYPES OF FRINGE BENEFITS
There are various categories of fringe benefits and specific valuation rules apply for each. These categories are:
- Car – A car that you own or lease made available for the private use of your employee
- Car Parking – Arisen if an employer provides car parking to an employee on the employers’ premises or in a commercial parking station
- Entertainment – Provision of entertainment by way of food, drink or recreation and accommodation or travel in connection with these provisions
- Expense – Paying or reimbursing a business, private or combination of both expense incurred by the employee
- Loan – Employee receiving a loan and there is either no interest or a low rate of interest
- Debt waiver – Release of an employee from the obligation to repay a debt
- Housing – Provision of accommodation to your employee rent-free or at a reduced rent where accommocation is their place of residence
- Board – Meals provided to an employee with accommodation for at least two meals a day
- Living Away From Home Allowance (LAFHA) – Allowance paid to an employee to cover additional expenses incurred because they are required to live away from their normal place of residence
- Property – Property provided to employees either free or at a discount
- Residual – Any fringe benefit that does not fall into one of the above specific categories
REPORTING, LODGING AND PAYING FBT
You must lodge a FBT return if you have a liability during the FBT year, which is 1 April to 31 March. Your return must be lodged and paid by 21 May, however lodging with a tax agent allows for extended lodgement arrangement. If you are registered for FBT but do not need to lodge a return, you will need to complete a Fringe benefits tax – notice of non-lodgement.