Do you provide cars, holidays or club membership to your employees?
Rewarding your employees beyond their usual salaries is a great way to show your appreciation for a job well done.
If you do provide your employees with benefits or lifestyle assets to use for their personal enjoyment, it is important to remember that these benefits and assets may have fringe benefit tax (FBT) implications for your business.
Ensure you are meeting your FBT obligations by keeping accurate records to determine any related income tax deductions you may be able to claim.
The FBT year runs from 1 April to 31 March.
What is FBT?
- FBT is a tax employer’s 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 be subject to FBT.
- FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided.
Types of fringe benefits:
- Car fringe benefits;
- Car parking fringe benefits;
- Entertainment and fringe benefits;
- Expense payment fringe benefits;
- Loan fringe benefits;
- Debt waiver fringe benefits;
- Housing fringe benefits;
- Board fringe benefits;
- Living away from home allowance fringe benefits;
- Property fringe benefits (including property, goods or shares);
- Residual fringe benefits (benefits not covered by the above categories).
Private use of exempt motor vehicles for FBT
If a car you own or lease is made available for the private use of your employee, you may be providing a car fringe benefit. There are some circumstances where use of the car may be exempt from FBT.
Speak to your tax adviser regarding FBT car-related exemptions where you make an eligible vehicle available to your employee for their minimal private use.