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What is Fringe Benefit Tax (FBT)?
What is FBT?
Fringe Benefits Tax (FBT) is a tax that employers in Australia pay on certain non-cash benefits they give to their employees. These benefits can include things like company cars, gym memberships, and health insurance, which are extra perks on top of regular salaries or wages. FBT was introduced in 1986 and is based on the value of these benefits. Employees do not have to pay this tax themselves; itโs the employer’s responsibility.
How FBT Works
FBT is calculated every year, with the FBT year running from April 1 to March 31. The current FBT rate is 47%, which includes the highest income tax rate plus the Medicare levy. Employers need to figure out how much FBT they owe and submit an FBT return if they provide benefits that go over a certain amount.
Exemptions and Reporting
Certain benefits are exempt from FBT, such as work-related items and some minor benefits. However, if the value of a fringe benefit exceeds $2,000, it must be reported on the employee’s PAYG payment summary, although it does not count as taxable income for the employee.Understanding FBT is essential for employers to ensure compliance with Australian tax laws while effectively managing their employee benefits. By being aware of FBT obligations and exemptions, businesses can make informed decisions about the types of benefits they offer and how to manage their overall tax liabilities.