Fringe Benefit Tax

Information about taxes incurred on fringe benefits in Australia...

Fringe benefit tax (FBT) was introduced in 1986 in order to reduce the amount of non-cash, non-taxable benefits (or 'perks') offered to employees by employers as part of their salary package. FBT is payable by employees on various benefits, including children's private education, company cars for private use; free or subsidised accommodation; free holiday travel; low-interest or interest-free loans; private health insurance; airline transport provided free or at a discount to employees in the travel industry; discounted goods or services provided by an employer in excess of a specified threshold; entertainment expenses; payment or reimbursement of private expenses on behalf of employees; and the waiver of employee loans or debts.

Company cars are taxed at between 7 and 26 percent depending on the business 'mileage'. However, leases of luxury cars as part of executive salary packages are exempt. A portion of a living-away-from-home allowance paid to employees may also be subject to FBT, although 'reasonable' costs for food and accommodation aren't. Staff canteens, employee share acquisition schemes and superannuation schemes are exempt from FBT.

Frequent-flyer schemes aren't taxable, even when your employer pays the membership fees, and childcare provided on 'business premises' or a building controlled by your employer is also exempt (including employer sponsored/ leased places at childcare centres).

FBT is paid at the rate of 46.5 percent. The FBT tax year is different from the financial year and runs from 1 April to 31 March. Payments must be made quarterly - by the 28 of July, October, January and April - each payment being equal to 25 percent of the previous year's liability, the balance being payable when your annual tax return is filed. An employer must usually file an annual FBT return by 28th April each year and fringe benefits are recorded on the employee's payment summary (just in case you forget to declare any of them!).

Extract from Living and Working in Australia (8th Edition - 2013) David Hampshire Published by Survival Books Ltd, Survival Books, P.O. Box 3780,Yeovil, Somerset, BA21 5WX, United Kingdom. Tel/Fax: (+44) 01935-700060 Copyright © Survival Books Ltd All Rights Reserved