What is Fringe Benefits Tax?
Employers who provide non-cash benefits (ie rewards that aren't reported through payroll) will likely pay FBT on these benefits.
When an employer pays wages to an employee, they hold aside taxes, and this is paid to the ATO on the BAS, for when the employee lodges their tax return. It is reported each pay via Single Touch Payroll reporting.
If you aren't paying staff traditionally with wages, then FBT kicks in to put the tax on to the employer for not paying the employee properly (via wages with tax and super). This includes payments for things for spouses and directors too, even if not "on the books" as employees.
Some examples include:
- providing a company car
- giving tickets to a sporting game
- fancy weekends away
- providing free gym memberships
- providing free or low-cost health insurance
- providing flights for holidays
- providing housing
- providing anything else that is not classed as wages and taxed accordingly.
If you are an employer - you will pay the FBT tax at a tax rate of 47% after some weird calculations are made (grossing up - depending on if the thing you have paid has GST or not).
If you are an employee, then the value of the thing that you received may show on your income statement, and form part of your income for the year. While you do not pay income tax on this amount, it may form part of your total income calculation for other purposes.
If you provide non-cash benefits to your staff, contact us to see if you need to prepare a Fringe benefits tax return for the year from 1 April to 31st March, and add a Reportable Fringe Benefit Amount (RFBA) on the Payroll Finalisation in July.
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