Top tips for minimising Fringe Benefit Tax

Fringe benefit tax (FBT) is a tax paid by an employer on certain benefits provided to employees or their employees’ family or other associates. FBT is calculated on the taxable value of the fringe benefit. The end of year deadline for employers to assess their FBT liability is the 31^st March.

How is FBT calculated?

An employer needs to ‘gross-up’ the taxable value of the benefits they’ve provided to employees. The FBT is 47% of this ‘grossed-up’ value of the fringe benefits.

Examples of a fringe benefit

A fringe benefit is like a payment to an employee, but in a different form to salary or wages. There are different types of fringe benefits including:

• allowing an employee to use a work car for private purposes
• car parking
• paying an employee's gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by an employee, such as school fees
• giving an employee a discounted loan
• giving benefits under a salary sacrifice arrangement with an employee

Top tips to minimise or avoid FBT

An employer can claim an income tax deduction and GST credits for the cost of providing fringe benefits.

• If you can claim GST credits, you claim the GST-exclusive amount as an income tax deduction. If you can't claim GST credits, you claim the full amount as an income tax deduction.
   
• FBT liability can be reduced by having the employee contribute towards the cost of a fringe benefit.
   
• By providing the employee with a cash bonus instead of a benefit, an employer won't have to pay FBT. The employee will pay income tax on the amount.
   
• An employer can reduce their FBT liability by using alternatives to fringe benefits or providing benefits that are eligible for a concession.
   
• Exemptions and concessions apply to a range of fringe benefits including:
   
  • Work-related items such as portable electronic devices and tools of trade
  • Minor benefits (with a taxable value of less than $300)
  • Emergency assistance
  • Retraining and reskilling redundant employees, redeployment or job seeking
  • Taxis, ride-sourcing and public transport
  • Work-related use of an eligible vehicle
  • Car parking
  • Food or drink consumed on your business premises
  • Accommodation and location related fringe benefits where employees are required to work in remote areas or away from home
     
• If you’re a not-for-profit employer, you may be eligible for an exemption or rebate for not-for-profit organisations.
   
• Check if contributions for employee long service leave, sick leave or redundancy payments are exempt from FBT.

How we can help

Speak to your local TaxAssist Accountant who can help you meet your FBT obligations as an employer and ensure you only pay what is due. Click here to complete our Fringe Benefit Tax questionnaire ahead of your appointment.

Give us a call on 08 6245 7506 or fill in our enquiry form and we can set up a free initial consultation.

Date published 22 Mar 2023 | Last updated 23 Mar 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.