As the Fringe Benefits Tax lodgement date looms closer, it’s important to consider if your business has provided any fringe benefits during the year and confirm what your fringe benefits tax obligations are.

What is FBT?

Fringe benefits tax (FBT) is a tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates.

For FBT purposes, an employee includes a:

• current, future or past employee
• director of a company
• beneficiary of a trust who works in the business.

If you’re a sole trader or a partner in a partnership, you are not an employee. Benefits you provide to yourself are not subject to FBT.

Your clients are not employees. Benefits you provide to clients, such as entertainment, are not subject to FBT.

FBT is separate to income tax and it is calculated on the taxable value of the fringe benefit.

The FBT year runs from 1 April to 31 March.

FBT returns are due to be lodged by 25 June 2025.

Note: any FBT paid is tax deductible.

What is a Fringe benefit?

 A fringe benefit is some form of payment or benefit provided to an employee, but in a different form to salary or wages.

Some common examples of fringe benefits include:

• allowing an employee to use a work car for private purposes
• car parking
• paying an employee’s gym membership or private health insurance
• providing entertainment by way of free tickets to concerts, sporting events, etc
• reimbursing a personal expense incurred by an employee
• giving an employee a discounted loan
• giving benefits under a salary sacrifice arrangement with an employee.

FBT Obligations as an Employer

 If you provide a fringe benefit to your employee(s), you are required to lodge a FBT return with the ATO to report this and to pay the fringe benefits tax.

FBT is levied at a tax rate of 47%.

The value of the fringe benefit provided is grossed-up for FBT calculation purposes (Type 1 gross up rate for GST inclusive benefits = 2.0802 and Type 2 gross up rate for GST exclusive benefits = 1.8868).

A worked example of the FBT calculation is provided below:

• An employee is provided with a car by their employer which they use for personal use. The value of this car fringe benefit is $10,000 (GST inclusive) for the year

As mentioned above, FBT Paid is included as an income tax deduction for the Employer which will offset some of the FBT paid.

 In addition to paying FBT, an employer must report the grossed-up taxable value of the fringe benefits provided if they are over $2,000 on the employee’s income statement, which is processed via single touch payroll.

FBT Obligations as an Employee

As an employee, your only obligation is to report any fringe benefits you receive in your tax return (the reportable FBT amount should be shown on your income statement).

Whilst you are not taxed on this amount directly, it is included for determining:

• your liability for the Medicare levy surcharge
• your entitlement to the private health insurance rebate
• whether you are liable for Division 293 tax for superannuation contributions
• whether you can offset your business loss against other income (non-commercial losses)
• the amount you must repay against your HECS/Study Support Loans
• your entitlement to various tax offsets (i.e zone offset, seniors & pensioners offset)
• your eligibility for family assistance payments (Child Care Subsidy, Family Tax Benefit, etc)
• your child support obligations.

Common FBT exemptions

There are a number of exemptions provided in respect of FBT, some of the more common exemptions are listed below:

• Minor benefits that satisfy the criteria of less than $300 (inclusive of GST) in value per employee and provided on an infrequent basis may be exempt from FBT.
• Food and drinks provided which meets all of the following criteria:
  • Consumed by current employees;
  • Consumed on the business premise;
  • Consumed on a working day.
• Items that are primarily used for work purposes may be exempt from FBT ie. Laptops, mobile phones or tools.
• Not-for-profit organisation may be exempt from FBT up to a capped threshold. These include:
  • Public benevolent institution and health promotion charities are capped at $30,000 per employee;
  • Hospitals and ambulance services are capped at $17,000.

• Single cab Ute exemption for vehicles with limited private use
• Dual Cab Ute exemption for vehicles with limited private use and carry a load of 1 tonne or more
• Remote Area exemption for accommodation provided to employees in a remote area

FBT for Electric Vehicles (EVs)

You do not pay FBT if you provide private use of an electric car that meets all the following conditions:

• the car is a zero or low emissions vehicle
  • A vehicle is a zero or low emissions vehicle if it satisfies both of these conditions:

1. It is a:

• • 1. • battery electric vehicle
       • hydrogen fuel cell electric vehicle, or
       • plug-in hybrid electric vehicle (this does not include hybrid vehicles, that are only fuelled by liquid petrol

2. It is a car designed to carry a load of less than one tonne and fewer than 9 passengers (including the driver).

• the first time the car is both held and used is on or after 1 July 2022
• the car is used by a current employee or their associates (such as family members)
• luxury car tax (LCT) has never been payable on the importation or sale of the car.

Note: From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law.

FBT is a continually changing area of taxation with regular adjustments to rates & thresholds, inclusion/exclusion of specific fringe benefits and exemptions. It is crucial to stay updated with changes from relevant tax authorities to maintain compliance.

As each employer position is different, for any assistance please contact your Hall Chadwick QLD advisor.