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Fringe Benefits Tax (“FBT”) is a tax that is imposed on non-cash benefits provided to employees. FBT is payable by the employer, not the employee, although the value of taxable fringe benefits has to be reported on employees’ Payment Summaries.

The 2014-2015 FBT year runs from 1 April 2014 to 31 March 2015. If fringe benefits were provided to employees during this period a Fringe Benefits Tax Return may need to be lodged by 21 May 2015 and the FBT paid by 28 May 2015.

The FBT law covers ALL non-cash benefits provided to employees. Certain benefits are then specifically exempted, such as superannuation contributions.

Common taxable fringe benefits are:

• Company cars provided to employees
• Free goods or services given to employees
• Paying or reimbursing employee expenses
• Interest-free or low interest loans  provided to employees
• Food or accommodation provided to employees

FBT is calculated using a complicated formula that results in the FBT payable being equal to about 96% of the taxable value of most benefits. It assumes that all employees would pay tax at the top marginal tax rate, which is currently 49%!

For this reason it is better to have employees pay a contribution equal to the taxable value of the fringe benefits provided, out of a bonus paid to them for the purpose. This is 25% to 90% cheaper than paying Fringe Benefits Tax.

By now our employer clients should have received a Fringe Benefits Tax questionnaire from us so that we can determine the FBT liability for your business. We will then send instructions to reduce the FBT liability to nothing.