Fringe benefits tax

The checklist |  Tax-free benefits |  Different rates |  The paper trail

If you provide certain benefits to your staff, or their associates, you may be up for fringe benefits tax (FBT).

This tax is separate to income tax, and is based on a 'taxable value' of the benefits provided, which is calculated according to the categories the benefits fall into. The Tax Office has even given FBT its own tax year, from April 1 to March 31. The upside for your staff is that they do not then have to pay income tax on the value of the benefits.

Salary of course is not a fringe benefit, and neither is a super contribution. Entitlements under employee share acquisition schemes are not deemed to be a fringe benefit, nor are termination payments (and you can even include a company car in a termination package and not invite an FBT liability).

But you are giving a fringe benefit if, for example, you allow a staff member to use a work car for private purposes, give one of them a cheap loan, reimburse another for a private expense, such as school fees, or generally provide entertainment or recreation – and for FBT purposes, this would even include taking clients to the footy.

The checklist
The following checklist will help you work out if you are providing a fringe benefit to your employees. If you answer yes to any of the following questions, you may have to pay FBT.

• Do your employees take cars home and garage them overnight, even if only for security reasons?
• Do your employees use cars or other vehicles the business owns for private use?
• Do you have a salary package arrangement with any of your employees?
• Have you paid for or reimbursed any employees' personal expenses?
• Do you provide entertainment, such as food, drink or recreation to your employees?
• Have you given property, such as electrical goods, to your employees either free or at a discount?
• Do you provide any employees with a house or unit of accommodation?
• Do you provide loans at reduced interest rates to any employees?
• Have you released any employee from a debt they owed the business?
• Do you provide any employees with living-away-from-home allowances?
• Are you a tax-exempt organisation that has provided food, drink or accommodation to employees (even if they are client functions)?

Once you register (here is the link to register for FBT) and are allocated an FBT number (which is actually the same as your tax file number) the Tax Office can send you information to help you lodge your return.

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