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Fringe Benefits Tax (FBT)

 

 

What is FBT?

FBT is a tax paid by employers for fringe benefits provided to employees. A fringe benefit may be defined as a form of ‘payment’ to an employee, although not in the form of salary or wages.

To constitute a fringe benefit, the benefit must be provided in respect of employment. In other words, this means that the benefit was made to a person because of their status as an employee, and this includes former and future employees.

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Who pays FBT?

As mentioned above, FBT is paid by employers. This remains true for all forms of employers, including sole traders, partnerships, trustees, and corporations.

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Types of fringe benefits

There are generally 13 different types of fringe benefits. The most common types are briefly outlined below:

Car fringe benefit

This arises when an employer provides for a car owned or leased by the employer for the private use of an employee. Generally speaking, travelling to and from work is considered a private use of a vehicle.

Expense payment fringe benefit

An expense payment fringe benefit is one where an employer reimburses an employee or third party for expenses incurred by the employee. The expense may be a business and/or a private expense. The crucial factor is that the expense must be incurred by the employee.

Housing fringe benefit

This occurs where an employer provides an employee with the right to use a unit of accommodation that the employee uses that unit of accommodation as their usual place of residence. This right of the employee does not need to be an exclusive right.

Living away from home allowance fringe benefit

This is an allowance paid to an employee to compensate for additional expenses incurred and any disadvantages suffered by the employee for having to live away from home in order to perform work-related duties.

Entertainment

This includes the provision by an employer to an employee of entertainment by way of food, drink or recreation. Examples may be the cost of theatre tickets purchased by an employee and reimbursed by an employer; providing accommodation or transport in respect of such entertainment; and food and drinks.

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If you would like more information or assistance regarding FBT or other tax related matters, complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.