A fringe benefit is provided by an employer to an employee or employee associate, instead of salary or wages. Fringe benefits can be provided by the employer, an associate of the employer, or a third party through an arrangement with the employer. An employee is defined by law as a former, current or future employee.
The FBT year operates from April 1 to March 31 each year. FBT is payable upon the taxable value of various benefits provided.
What is not a fringe benefit?
- Payment of salary and wages.
- Employer contributions to complying superannuation funds.
- Approved employee share acquisition schemes
- Eligible termination payments ( e.g. a company car sold, or given to an employee upon termination of employment).
- Certain benefits provided by religious institutions to Minister's of the word.
What is a fringe benefit?
- Airline Transport
- Boarding - e.g. provision of lodging and meals
- Car parking in certain circumstances
- Debt waivers - the forgiveness of debt
- Entertainment - e.g. food, drink, recreation
- Expense payments - e.g. school fees
- Housing
- Living away from home allowances
- Loans - e.g. granting an employee a cheap loan
- Property
- Residual
For more information please refer to the ATO website on FBT categories
How can I reduce my FBT liability?
- Provide cash salary or wages instead of a fringe benefit.
- Providing only benefits that are exempt from FBT.
- Providing benefits that your employee would be entitled to claim as a tax deduction.
- Use employee contributions towards the cost.
Further information can be obtained from the ATO.
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Last updated Monday 13th February 2012
© Peter Mulcahy 2011