FBT is a tax on benefits that employees receive and enjoy as a result of their employment (including shareholder/employees of companies). FBT in effect replaces the PAYE tax that would be deducted from the employee if the employee was given the money to purchase the benefit as part of salary or wages instead of the actual benefit. For the purpose of the FBT regime, employees also includes shareholder/employees of close held companies.
The four main groups of fringe benefits are:
- - motor vehicles
- - low-interest loans
- - free, subsidised or discounted goods and services
- - employer contributions to sickness, accident or death benefit funds, superannuation schemes
and specified insurance policies.
Gifts, prizes and other goods provided to employees and their families are fringe benefits. If you pay for employees' entertainment or private telecommunications use, these benefits may also be liable for fringe benefit tax.
FBT is generally payable on a quarterly basis although depending on the value of fringe benefits provided, taxpayers can file a single annual FBT return.
The rate of FBT tax is generally a flat rate of 49.25% from 1/10/2010 of the value of the benefit supplied, although this can be used as an interim rate with a year end "wash up" return being filed whereby the final tax is calculated with reference to the income earned by the employees who have enjoyed the benefit.
The most common form of FBT relates to the provision of motor vehicles for employees. There are certain exemptions that apply (for example, work related vehicles and days when the vehicle is taken out of town for business purposes). Contrary to popular belief, these exemptions (especially those relating to work related vehicles ) do not apply automatically and there are certain rules that must be complied with to obtain the exemption (more particularly with respect to the availability of those vehicle, including utility type vehicles, for private use). Detailed advice can be provided by us in each case to ensure that any available exemption can be take advantage of (and of course, that you pay FBT when required to do so).