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A Guide to Fringe Benefits Tax (FBT) for Employers

Do you have a complete understanding of the tax implications of providing fringe benefits to your employees? If not, you’re not alone – but ignorance of the law is no excuse for non-compliance. Fringe benefits tax (FBT) is a tax levied on everything from company cars to accommodation, loans, entertainment and more.

Read on for our comprehensive guide to FBT in Australia, including what it is, who needs to pay it, how it’s calculated, as well as important considerations for your business.

What is fringe benefits tax (FBT)?

FBT is a tax levied by the ATO on the value of certain benefits that employers provide to their staff – in addition to their paycheques. FBT is separate from income tax and is paid by the employer, not the employee – which is why it’s so important you are aware of your obligations as a business owner.

Who is liable to pay FBT?

Employers who provide fringe benefits to their teams are generally liable to pay FBT. This includes companies, partnerships, trusts and organisational structures. However, there are some exemptions and concessions available, and it's important to understand your specific circumstances to determine your FBT liability.

Fringe benefits can take many forms and may include:

  • Company cars: Providing a car for an employee to use privately, including for commuting between home and work.
  • Accommodation: Paying for an employee’s accommodation.
  • Loans: If your provide a loan to an employee at a reduced interest rate or interest-free, it’s considered a fringe benefit.
  • Entertainment: Tickets to events, meals or recreational activities are all considered a fringe benefit under the ‘entertainment’ umbrella.
  • Other benefits: School fees for employees' children, health insurance premiums, gym memberships and more.
How is FBT calculated?

The value of fringe benefits for tax purposes is generally based on the cost of providing the benefit, including any GST paid, minus any amount your employee contributes to the benefit. The ATO provides various methods for calculating the value of different types of fringe benefits, so make sure you are using the correct method for the relevant benefit.

Key reminder: The FBT year runs from 1 April to 31 March. As an employer, you need to report and pay FBT by 21 May each year.

Important FBT considerations
  • Record-keeping: You need to keep accurate records (for at least five years) of all fringe benefits provided to your employees, including the type of benefit, value and any employee contribution.
  • Exemptions and concessions: There are various exemptions and concessions available for certain fringe benefits, such as minor benefits valued at $300 or less.
  • Employee declarations: Employers must get declarations from employees who receive fringe benefits, specifying the type of benefit and its value. These declarations must be collected within 14 days after the end of the FBT year.
  • Employee contributions: If employees make a contribution towards the cost of a fringe benefit, it can reduce its taxable value. So make sure you keep track of all contributions and ensure they are correctly recorded and deducted.
  • FBT reporting: You will need to report the taxable value of any fringe benefits on your employees’ group certificates, as well as in your annual FBT return..

“Fringe benefits can be a complex tax area, so it’s essential to get tax support from a qualified expert to ensure you are meeting your FBT obligations,” says David Crook, Managing Director at Nero Financial. “The experts at Nero will work to understand where you are on your journey and can help get you on the path to business success.”

Whether you need lending support for business growth or you simply want to get expert advice on how to elevate your business, we can help. Get started today by contacting Nero Financial or call us on 1300 025 949.