Everything That You Should Know About Fringe Benefits Tax

Are you an aspiring tax lawyer? Have you often come across the terms FBT year, FBT in remuneration and similar ones that include F, B, and T? Do you often wonder what is FBT and how is it relevant to your taxation theory courses? My Assignment Services’ law assignment help expert tells you everything you should know about FBT!

What is FBT?

Fringe Benefits Tax, or FBT, is a tax that employers pay on selected benefits they offer to their employees. These benefits also include and extend to the family of the employee or associates.

The benefits of the employers may be a part of the salary of the employee. Also, if the employer wishes, the benefits can be in addition to the salary.

Is FBT a part of income tax?

No, Fringe Benefits Tax is separate from the income tax and are calculated on the value of the fringe benefits provided.

The income tax is a tax paid on the income you are earning. FBT, on the other hand, is a tax that is paid on the total value of the benefits that the employee is enjoying from the employer.

What is an FBT year?

In Australian employment, one FBT year runs from 1 April to 31 March.

What are the various categories of fringe benefits?

The Australian Taxation Office has identified 11 different categories under which we can classify all types of fringe benefits provided by an employer.

They are -

1. Car parking fringe benefits

2. Car fringe benefits

3. Expense payment fringe benefits

4. Entertainment and fringe benefits

5. Loan fringe benefits

6. Housing fringe benefits

7. Living away from home allowance fringe benefits

8. Debt waiver fringe benefits

9. Board fringe benefits

10. Residual fringe benefits

11. Property fringe benefits

Let us discuss a few of these.

Car parking fringe benefits

A car parking fringe benefit is when the employer gives the employees car parking and all the conditions mentioned below are met -

1. The car should be parked in a space that is owned by, leased by or is in the control of, the employer.

2. The time for which the car is parked is more than 4 hours and is parked between 7 am and 7 pm.

3. The car is owned by, leased by or is in the control of, the employee or is provided by the employer.

4. The parking is provided because of the employee’s employment.

5. The car should be parked either in the place of employment or near that.

6. The employee is using the car to travel from home to work or work to home at least once on that day.

7. There is a commercial parking station within one-kilometre radius which charges fees for all day parking.

Expense payment fringe benefits

If you observe, you will see that there are a lot of companies who offer expenses allowance to their employees. Kind of a situation like “This meal is on the house”. They are called expense payment benefit.

These benefits are rolled out when the employee incurs an expense and the employer -

1. Either reimburse the payment for the expense

2. Or pays a third-party member for the expense

The expense can be personal or work related or a combination of both. The condition is that the expense has to be incurred by the employee. If the payment was done by the employee but was incurred indirectly by the employer, it is not an expense payment benefit. For example, the use of a corporate credit card.

Housing fringe benefits

If the employer is providing accommodation to the employee, either rent-free or at a reduced rent and the accommodation is the usual place of residence of the employee, then this is counted as a housing fringe benefit.

What accommodation units are accepted in this benefit section?

1. A house, apartment or home unit

2. Accommodation in a motel, hotel, bunkhouse, guest house or living quarters

3. A mobile home or a caravan

4. Accommodation on a ship or some other floating structure (yes, spaceships also)

But remember that if the employer provides accommodation to the employee in a remote location, it may be exempted from the FBT.

Want to learn more about these benefits and the ones I did not talk about?

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