FBT season is upon us! Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wages package. If you are a director of a company or trust, benefits you receive may also be subject to FBT.
Types of fringe benefits
FBT exemptions and concessions
Some benefits are exempt from fringe benefits tax (FBT) or receive concessional treatment (for example, living away from home allowance). Specific exemptions and concessions apply to some non-profit organisations.
- Work-related items exempt from FBT
Subject to the limitations below, a number of employee benefits are exempt from fringe benefits tax (FBT), including the following work-related items:
- portable electronic device such as mobile phone, laptop, portable printer and GPS navigation receiver
- computer software
- protective clothing
- tools of trade.
The FBT exemption is limited to:
- items primarily for use in the employee’s employment, and
- one item per FBT year for items that have a substantially identical function, unless the item is a replacement item
Minor benefits exemption
Minor benefits are exempt benefits. A minor benefit is both:
- less than $300 in notional taxable value, and
- unreasonable to treat as a fringe benefit.
Concessions, including specific concessions for non-profits
Concessions apply to some fringe benefits. The concession is a reduction in the taxable value of the fringe benefit that results in a reduced amount of fringe benefits tax (FBT), or even no FBT, being payable.
A reduction in the taxable value of the fringe benefit applies to:
- some benefits provided in remote areas
- some travel provided to employees posted overseas
- reimbursement of costs incurred by employees using their own car for relocation
- some other benefits.
Living away from home allowance
A living-away-from-home allowance (LAFHA) fringe benefit may arise if you pay an allowance to your employee to cover additional expenses incurred, because they are temporarily required to live away from their normal place of residence to perform their employment duties.
Access to tax concessions for LAFHA fringe benefits will generally be limited to where:
- your employee maintains a home in Australia at which they usually reside
- your employee provides you with a declaration about living away from home
- the fringe benefit relates to the first 12-month period at a particular work location