What is fringe benefits?

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. FBT calculated on the taxable value of the fringe benefit. As an employer, you must self-assess your FBT liability for the FBT year(1st April to 31st March). If you have an FBT liability, you must lodge an FBT return and pay the FBT you owe.

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

There are different types of fringe benefits. Examples include:

• allowing an employee to use a work car for private purposes
• car parking
• Loan and debt waiver fringe benefits
• paying an employee's gym membership
• providing entertainment by way of free tickets to concerts
• reimbursing an expense incurred by an employee, such as school fees
• giving an employee a discounted loan
• Entertainment-related fringe benefits-Food and drink, Christmas party
• Living-away-from-home allowance
• Housing accommodation
• giving benefits under a salary sacrifice arrangement with an employee.
• Self-education expenses

Who pays FBT? The employer pays FBT.
This is the case even if the benefit is provided by a third party under an arrangement with the employer.
How much FBT do you pay?
The FBT you pay is 47% of this 'grossed-up' value of the fringe benefits.
Reportable fringe benefits amounts and grossing up
Only the lower gross-up rate is used for reporting on employees' income statements or payment summaries. This is regardless of whether the benefits provided are type 1 or type 2.

Pay by instalments threshold
If your FBT liability for the last year was $3000 or more, you will need to pay 4 quarterly installments

Rate for 31 March 2020 to 31 March 2024

Table 1: FBT rate for years ending 31 March 2020 to 31 March 2024

Gross up rates for FBT

Type 1: Higher gross-up rate

This rate is used where the benefit

Table 2: FBT Type 1 gross-up rate

Type 2: lower gross-up rate

This rate is used is the benefit provider is not entitled to claim GST credits.

Table 3: FBT Type 2 gross-up rate

Reportable fringe benefits

If you provide certain fringe benefits with a total taxable value of more than $2,000 during the FBT year, you must report:

• the grossed-up taxable value of the fringe benefits on the employee's income statement or payment summary
• for the corresponding income year.

Reportable fringe benefits are grossed-up using the lower gross-up rate.

So, for example, if an employee receives certain fringe benefits with a total taxable value more than $2,000 for the FBT year ending 31 March 2023, the reportable fringe benefits amount is $3,773.

Table 4: Reportable fringe benefits thresholds

Capping of concessional FBT treatment for certain employers

The capping thresholds for the FBT exemption and FBT rebate concessions are shown below

Table 5: FBT treatment for certain employers