Fringe Benefits Tax (FBT)
FBT is a tax paid by employers on certain benefits that are provided to employees. If you conduct your business through a company or a trust and you are a director you may also need to pay FBT on benefits you provide to yourself. Once you have identified that you are paying benefits to employees you need to register for FBT with the ATO.
FBT is a separate tax from any income tax or GST, and is calculated on benefits paid from the 1st April to the 31st March each year.
Benefits may include the following:
- Use of a work motor vehicle for private use (driving to and from work, use on the weekends)
- Paying private expenses for the employee, for example health insurance, school fees etc
- Providing entertainment by way of food, drinks and recreational activities
- Salary sacrifice arrangement for benefits that are not tax deductible
A benefit can be monetary or it can be a right, privilege or a service provided in respect of employment.
FBT is calculated on the taxable benefit which is grossed-up and tax is payable at a rate of 46.5%. If the employee contributes towards the cost of the fringe benefit the taxable value is reduced by the amount of the payment.
If you have any questions or need assistance with your FBT obligations please do not hesitate to contact our office.