Fringe Benefit Tax – Know your obligations/entitlements
27 February, 2023 BY Bibek Nepal, CPA

Fringe Benefit Tax – Know your obligations/entitlements

What is Fringe Benefits Tax?

Fringe Benefit Tax (FBT) is a tax levied on non-salary benefits or perks provided by an employer to their employees as a part of their employment package. These fringe benefits can include items such as company cars, health insurance, housing, free or subsidized meals, and other non-cash benefits.

How much FBT do you pay?

For 2022-23 financial year, FBT is payable at 47% of ‘grossed-up’ value of the fringe benefits. “Grossed-up” value is equivalent to the gross income your employees would have to earn, at the highest marginal tax rate (including the Medicare levy), to buy the benefits themselves. Gross up amount is calculated by multiplying the cost of fringe benefits with following Gross Up Rates:

  • Type 1 Gross Up Rate (if fringe benefit is entitled to GST credit) is 2.0802
  • Type 2 Gross Up Rate (if fringe benefit is not entitled to GST credit) is 1.8868

When is FBT due?

FBT return is due for lodgement and payment for each FBT year by 21 May. The FBT year runs from 1 April to 31 March. If previous year’s FBT liability was $3,000 or more, employer is required to pay FBT in quarterly instalments in their BAS’s.

Are you entitled to claim exemptions or concessions?

There are certain exemptions and concessions available for employers regarding Fringe Benefits Tax (FBT). These exemptions and concessions may apply to specific types of fringe benefits, certain types of employers, or specific circumstances.

Some of the common FBT exemptions and concessions include:

  1. Car benefits – From 1 July 2022, FBT is exempt on eligible electric cars and associated car expenses.
  2. Small Business FBT Concession: This concession is available for small businesses up to certain turnover threshold for benefits relating to car parking and other work-related devices such as laptops, mobile phones, or tools of trade, may be exempt from FBT if they are used primarily for work purposes.
  3. Minor Benefits: Benefits that have a value of less than $300 may be considered as minor benefits and may be exempt from FBT if certain conditions are met.
  4. Salary Sacrifice to Superannuation: Contributions made by an employee to their superannuation fund through salary sacrifice may be exempt from FBT.
  5. Certain Health-related Benefits: Some health-related benefits, such as gym memberships or health checks, may be exempt from FBT if they are provided as part of an employer’s corporate health program.

It is important to note that the eligibility and conditions for these exemptions and concessions may vary, and employers should seek professional advice to determine their FBT obligations and entitlements.

Get in touch with us today if you have any questions or need any help in determining your FBT obligations and entitlements.

Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.

About the Author

Bibek Nepal

Director & Consultant

Bibek is passionate about helping his clients to save their taxes, manage their finances and help them grow their wealth. He has extensive knowledge, experience, and skills in individual taxation, small business accounting, taxation, and advisory services. He is a qualified Chartered Accountant from overseas and a member of the CPA Australia. Learn more at www.linkedin.com/in/nepalb

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