Fringe Benefits Tax Guide

Businesses that provide fringe benefits to employees must lodge an annual Fringe Benefits Tax (FBT) Return. The FBT year runs from 1 April of the previous year to 31 March of the current year, with lodgements and payments for the 2024 year having a due date of 21 May 2024, or 25 June 2024 if lodging through a tax agent.

Common examples of fringe benefits that may be provided to employees include:

• Allowing an employee to use a work car for private purposes.
• Entertaining staff by way of lavish meals, drinks and entertainment.
• Paying an employee’s private expenses, such as gym membership or private health insurance.
• Providing entertainment by way of free tickets to concerts.
• Reimbursing an employee for non-deductible expenses such as children’s school fees.
• Providing an employee with a discounted or interest free loan.

FBT exemptions and concessions

There are several exemptions and concessions available for certain types of fringe benefits. These exemptions and concessions include:

• Certain electric vehicles.
• Minor benefits: Benefits that are less than $300 (including GST) in value and provided on an infrequent or irregular basis may be exempt from FBT.
• Work-related items: Items that are primarily used for work purposes, such as laptops or tools, may be exempt from FBT. This includes portable electronic devices such as mobile telephones.
• Car parking: Car parking provided on the business premises may be exempt from FBT if certain conditions are met.
• Certain not-for-profit organisations such as Public Benevolent Institutions (PBIs) and charities, may be eligible for FBT exemptions for some benefits provided to their employees.
• Salary packaging an employee’s tax-deductible expenses.

Car Fringe Benefits

One of the most common fringe benefits we see is providing a car to an employee for their private use. The value of the benefit provided is based on a number of factors, including the cost of the car, the type of car, the date it was acquired, and the logbook business use percentage of the vehicle. There are 2 methods available to calculate the taxable value of a car fringe benefit - the statutory formula method and the operating cost method. Employers should be aware of the rules and requirements surrounding car fringe benefits to ensure compliance with their FBT obligations.

If you provide a car fringe benefit to your employee, please ensure you record the odometer reading of the car at 31 March each year. A record should also be kept of any car expenses your employee may have paid and not been reimbursed for, as these amounts will reduce the value of the car fringe benefit.

FBT can be a complex tax that requires careful attention from employers to ensure compliance. By understanding the basics of FBT and taking advantage of exemptions and concessions where possible, you can reduce the amount of FBT that you are required to pay.

For assistance with your FBT obligations or to have your questions answered about any tax obligations, feel free to contact us.