WHAT IS FBT: THE BEGINNER’S GUIDE TO FRINGE BENEFITS TAX
Overview – What is FBT?
Businesses need to pay part of each benefit’s taxable value. This sum includes perks supplied to workers’ families. The government expects companies to complete a separate FBT return.
An employer must calculate the amount due. It can also hire a business accountant to perform this task. The FBT year lasts from 1st April to 31st March.
Taxable benefits
Companies must pay taxes on numerous services and payments provided to employees. These perks include fitness centre memberships and entertainment. Vehicles used for non-work purposes are taxable as well. The same goes for some benefits associated with salary sacrifice arrangements. Likewise, a loan with special terms qualifies. The FBT also pertains to various other bonuses if they’re not exempt.
Some companies supply more than $2,000 in benefits to specific staff members during the year. In this situation, the correct amount needs to appear on an individual’s income tax payment
summary. This rule applies even if an employer runs an FBT-exempt organisation. Reportable fringe benefits appear on individual tax returns. Nonetheless, employees don’t pay taxes on these earnings.
Exempt benefits
The FBT doesn’t apply to some perks, such as Division 7A dividends. Exemptions also include stock share acquisition programs, super fund contributions and any benefits for contractors. Meals or snacks served at the office aren’t taxable. An employer needn’t pay taxes on a payment or gift given to a staff member at termination, according to the Australian Taxation Office.
When organisations supply work-related equipment, its value normally isn’t taxed. Examples range from tools and electronics to software. Briefcases and certain clothes are exempt, such as high-
visibility jackets. The same goes for business-related publications like trade journals. It doesn’t matter if the employer supplies them using a salary sacrifice agreement. They’re excluded from the fringe benefits amount either way.
Under some circumstances, the ATO treats a perk as a “minor benefit.” The FBT doesn’t apply in this situation. It’s not always easy to determine if a service qualifies for this exemption. Its value, purpose and frequency all affect the outcome. A benefit’s value must remain under $300 to qualify. Think about talking to a qualified business tax accountant for clarification.
Exempt employers
Many organisations gain exemptions from FBT. They include registered charities, public benevolent institutions, public ambulances and certain hospitals.
An exemption cap of $17,000 or $30,000 applies to some organisations. Normally, the tax doesn’t pertain to perks received by unpaid volunteers. The ATO often exempts religious institutions as well.
TAX deduction
Even if a company doesn’t qualify for exemptions, it can usually save money by claiming tax deductions and GST credits. Businesses may deduct the tax from their income taxes after they pay FBT. The government also lets them claim each perk’s actual expense as a deduction. This policy results in partial reimbursement.
Although taxable benefits may complicate a company’s finances, they play an important role in staff satisfaction. Happy employees often work harder and show greater loyalty. They also reduce recruitment costs. Does your New South Wales small business
need help to simplify FBT compliance? If so, turn to the experienced professionals at Alliance Accounting. Please contact us today to learn more about our affordable tax services.
Learn more about our business accounting services and read more Alliance Accounting articles.
Suite 5, Level 1,
173-179 Bigge St, Liverpool
NSW 2170
Level 2, 63
York Street, Sydney
NSW 2000
Liability Limited by a scheme approved under Professional Standards Legislation. © Copyright Alliance Accounting 2025. All rights reserved. Website by Brilliant Digital.