Fringe Benefits Tax (Australia)
Encyclopedia
Fringe Benefits Tax is a tax applied within the Australian tax system
by the Australian Taxation Office
. The tax is levied on most non-cash benefits that an employer provides "in respect of employment." The tax is levied on the employer, not the employee and will be levied irrespective of whether the benefit is provided directly to the employee or to an associate of the employee.
The tax was first imposed iyrtyhn 1986 and the operation of the tax is described by the Fringe benefits Tax Assessment Act 1986.
There are several specific 'types' of benefits listed with the legislation, including car fringe benefits, loan fringe benefits, housing fringe benefits and others. For each fringe benefit type, one or more methods is prescribed for determining the taxable value of the benefit.
Many employers will effectively recover their FBT payable. The ATO will approach the employer, but unless otherwise specified, it is the employee's income, so the employee must still pay the appropriate tax. If 'salary packaging' is an option to the employee, this is an effective way of receiving benefits in lieu of cash salary. If any FBT liability (current or expected) is evident, this liability can or must be packaged to cover the amount for which the employer is likely to liable.
Some benefits are specifically exempt from FBT, such as the following:
The list of exempt work-related items currently includes:
All exempt benefits are also exempt from income tax in the hands of the employee.
Special concessional rules apply to employer-provided motor vehicles. Either of two methods may be used. The statutory formula method is the more popular one because it requires less record-keeping. It provides lower FBT rates as vehicle usage increases and as vehicle capital value decreases.
tax return
s that are lodged annually.
Taxation in Australia
There are many forms of taxation in Australia. Individuals and companies in Australia may be required to pay taxes or charges to all levels of government: local, state, and federal governments...
by the Australian Taxation Office
Australian Taxation Office
The Australian Taxation Office is an Australian Government statutory agency and the principal revenue collection body for the Australian Government. The ATO has responsibility for administering the Australian federal taxation system and superannuation legislation...
. The tax is levied on most non-cash benefits that an employer provides "in respect of employment." The tax is levied on the employer, not the employee and will be levied irrespective of whether the benefit is provided directly to the employee or to an associate of the employee.
The tax was first imposed iyrtyhn 1986 and the operation of the tax is described by the Fringe benefits Tax Assessment Act 1986.
Fringe benefits
A benefit is a benefit in respect of employment - a benefit provided to somebody because they are an employee. The 'employee' may be a current, former or future employee, and treatment of the benefit will be the same whether it is received directly by the employee or by associate of the employee.There are several specific 'types' of benefits listed with the legislation, including car fringe benefits, loan fringe benefits, housing fringe benefits and others. For each fringe benefit type, one or more methods is prescribed for determining the taxable value of the benefit.
Calculation of the tax payable
FBT is paid by the employer at a rate of 46.5%, which represents the highest marginal income tax rate (45%), plus the Medicare Levy (1.5%). This rate is applied to the "grossed up" taxable value less any contribution by the employee.Many employers will effectively recover their FBT payable. The ATO will approach the employer, but unless otherwise specified, it is the employee's income, so the employee must still pay the appropriate tax. If 'salary packaging' is an option to the employee, this is an effective way of receiving benefits in lieu of cash salary. If any FBT liability (current or expected) is evident, this liability can or must be packaged to cover the amount for which the employer is likely to liable.
Some benefits are specifically exempt from FBT, such as the following:
- Remote area housing;
- Living Away From Home Allowances (partly exempt);
- Employee relocation expenses;
- Superannuation (retirement/private pension contributions);
- Minor benefits (less than $300 in value) incurred infrequently and irregularly;
- Work-related items (see below)
The list of exempt work-related items currently includes:
- protective clothing
- tools of trade
- briefcases
- mobile phones
- laptops and similar portable digital assistants (including software, portable printers, calculators, electronic diaries)
All exempt benefits are also exempt from income tax in the hands of the employee.
Special concessional rules apply to employer-provided motor vehicles. Either of two methods may be used. The statutory formula method is the more popular one because it requires less record-keeping. It provides lower FBT rates as vehicle usage increases and as vehicle capital value decreases.
Reportable Fringe benefits
Although FBT is paid by the employer it must also be reported on the employee payment summary for inclusion on personal incomeIncome
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
tax return
Tax return (Australia)
Australian tax returns for the tax year ending 30 June are generally due on 31 October of the same calendar year. Extensions can be made available. Each year, the Australian Taxation Office publishes TaxPack, a free document designed to help individuals complete their return...
s that are lodged annually.