What is FBT?

In order for FBT to apply, the following factors must be present:

• There must be a benefit

• Provided to employee (or an associate of an employee)

• Provided by an employer, associate of employer, or another person (arranger) under an arrangement with the employer

• Must be in respect of the employment of the employee

 

Why do I care? 

If you are an employer, you provided benefit to employee, then you may be liable for FBT. (taxable value) x (gross up factor) x 46.5% is the tax you need to pay to ATO.

What are the types of fringe benefits?

1. Car (Type 1)

2. Debt waiver (Type 2)

3. Loan (Type 2)

4. Expense payment (Type 1)

5. Living away from home allowance

6. Meal entertainment

7. Car parking (Type 1)

8. Property 

9. Exemption

Car – Employer provide a car to an employee 

Only the private use portion by the employee is subjected to FBT. There are two methods to calculate the fringe benefit amount.

1) Statutory method

(Base value*) x (Statutory fraction**) x (Private use days) / (Days in FBT year) – Employee contribution

*Base value = Car cost + Dealer delivery charge + Custom Duty + accessories

(Exclude: Stamp duty, registration, insurance, extended warranty)

**Statutory fraction – depends on annualised km travelled

• < 15,000 KM – 0.26

• 15,000 to 24,999 km – 0.20

• 25,000 to 40,000 km – 0.11

• > 40,000 km – 0.07

2) Operating cost method

Taxable value = (Operating cost*) x (Private use %) - employee contribution

* Operating cost (leased) = lease charges + Rego + insurance + fuel

* Operating cost (owned/HP) = Deemed depreciation + Deemed interest + Rego + Insurance + fuel

 

Debt waiver benefit 

Debt owed by an employee is being forgiven. 

Taxable value = amount of debt forgiven.

 

Loan benefit

A loan fringe benefit isthat an employee receives a loan and the rate of the interest is less than statutory rate of interest during the year.

Taxable value = (Loan amount) x (Statutory interest rate – loan interest rate)

  

Expense payment benefit

There are two types of expense payment benefit:

• Employer pays expenses on behalf of employee private usage. 

• Employer reimburses an employee for private usage that are incurred by the employee.

Taxable value is the amount of expenses paid excluded business related expenses.

 

Living away from home allowance

A living-away-from-home allowance arises when an employer pays an allowance to an employee as compensation to cover additional costs due to the fact that the employee requires to live away from their home in order to perform work.

If allowance provided is < 21 days, it will be classified as a travelling allowance and is not a living away from home allowance

Taxable value = (Food Allowance + Accommodation Allowance) – (exempt food component) – (Exempt accommodation component)

Exempt food component = Reasonable food – statutory (basic food component)

Exempt accommodation component = Reasonable accommodation 

Meal entertainment benefit

Entertainment provided to an employee by way of food or drink.

There are two type of method calculating taxable value:

1) 50/50 method

The taxable value is 50% of the expenses incurred by employer by providing meal entertainment for the FBT year.

2) The 12-week register method

The employer need to keep a record of 12-week to determine the percentage of meal entertainment fringe benefit. 

Taxable value = total meal entertainment expenses x register percentage

Car parking benefit

Car parking fringe benefits arise when an employer provides car parking spaces to an employee.

Taxable value = (Lowest cost of commercial car parking per day) x (No. of spaces provided to employees) x (No. of days occupied)

Property benefit

Employer provides to an employee with property free or at a discount, e.g. goods etc.

Taxable value = amount of the discount to market value of the goods provided.

Exemption

The following are common examples of benefits that are exempted from FBT:

• Salary and wages

• Employment termination payments

• Division 7A deemed dividends

• Compensation for personal injury

• Superannuation

• Relocation cost

• In-house health care

• Minor benefits less than $300

• Provision of work related items: e.g. mobile phone, briefcase, calculator, tools, software for business use, laptop, PDA etc

 

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