If you’re an Australian business owner, you may have heard about the Fringe Benefits Tax (FBT). This tax is levied on non-cash benefits provided to employees in addition to their salary or wages. But what exactly is the FBT, and how does it work? In this blog post, we’ll take a closer look at the Australian Fringe Benefits Tax and what it means for businesses.

What is the Fringe Benefits Tax?

The Fringe Benefits Tax is a tax levied by the Australian Taxation Office (ATO) on non-cash benefits provided to employees by their employers. These benefits are known as fringe benefits and can include things such as company cars, health insurance, and entertainment expenses. The FBT is designed to ensure that employees pay tax on the full value of their remuneration package, not just their salary or wages.

Who needs to pay FBT?

Employers are required to register for FBT if they provide any fringe benefits to their employees, regardless of whether the employees are full-time, part-time, or casual. This means that if you provide any non-cash benefits to your employees, you need to be aware of your FBT obligations.

How is FBT calculated?

The FBT is calculated at a rate of 47% of the taxable value of the fringe benefits provided. The taxable value is generally the cost of the benefit to the employer, including any GST paid. However, there are certain exemptions and concessions available that can reduce the taxable value, and therefore the amount of FBT payable.

Exemptions and concessions

There are several exemptions and concessions available for certain types of fringe benefits. For example, work-related items such as laptops and mobile phones that are primarily used for work and have a value of less than $300 are exempt from FBT. Small business employers are also eligible for a reduced FBT rate of 25% on certain fringe benefits, provided they have an aggregated turnover of less than $10 million per year.

FBT reporting

Employers are required to lodge an FBT return with the ATO each year, detailing the fringe benefits provided to their employees and the FBT payable. The deadline for lodgment and payment is 21 May for the previous FBT year.

The Fringe Benefits Tax is an important tax in Australia that affects employers who provide non-cash benefits to their employees. While the FBT rate is high, there are exemptions and concessions available that can reduce the amount of FBT payable. It’s important for employers to be aware of their FBT obligations and seek professional advice if necessary to ensure they are complying with the regulations.