What is fringe benefits tax?

The fringe benefits tax year comes to an end on the 31^st March 2017.

Fringe benefits tax is a tax on employers in relation to non-cash benefits that are given to employees.

The legislation surrounding this area is very long and complicated, and very costly for employers as the Fringe Benefits Tax rate is equal to the top individual marginal tax rate, which is currently 49%.

The fringe benefits tax regime applies to all employers regardless of their size. If you only have one employee you can be in the system. Even if you have no unrelated employees, for example, if you are the only employee in your company, you are still in the system.

There are some exemptions which carve out some benefits, such as minor and infrequent benefits that are under $300 or expenses that would be otherwise deductible to the employee (for example a subscription to a professional association). However most things that are provided to the employee for their private use will be caught in the system.

The most common fringe benefit is motor vehicles. If you provide a vehicle to your employee and they use it some private use you are caught. If you allow them to take the car home at night then you are caught even if they don’t use it for private use at all. If the car stays at the business premises overnight and the employee only uses it during the day for work you still need some documentation to verify this.

A common misconception is that utes are exempt from the Fringe Benefits Tax system. This is not the case, although utes that are over one tonne have different rules to cars, they are still in the system and any private use needs to be considered.

If you want to know more about Fringe Benefits Tax,  please contact our office so we can discuss this complicated area with you in further detail.

Contact FBT Guru,  Damien Allott, Partner.  Tel: 5221 7655