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Are you providing fringe benefits to your employees? Then you become liable to pay fringe benefits tax (FBT). FBT is a tax employers pay on certain benefits provided to their employees. The tax is levied on most non-cash benefits that an employer provides in respect of employment. It is levied irrespective of whether the benefit is provided directly to the employee or to an associate of the employee. You must register for FBT and lodge an FBT return if you have a liability during a FBT year (1st April to 31st March).

Types of fringe benefits
The term fringe benefit has broad meanings for FBT purposes. This includes rights, privileges or services. Fringe benefits have been categorised into 13 different types. The most common are:

Car Fringe Benefits

A car fringe benefit commonly arises if you provide your employee a car for private use or agree to get them a car. Car fringe benefits are one of the best ways for employers to minimise FBT payable to the ATO. The use of cars is calculated based on the operating cost and incurs a lower FBT.

Car parking Fringe Benefits
This fringe benefit may arise when you provide car parking for an employee at or near their place of employment, and if any commercial parking station is available for all-day parking within a one-kilometre radius of the premises on which the car is parked, and that commercial car parking station charges a fee for all-day parking that is more than the car parking threshold.

Entertainment Fringe Benefits
This is the most popular fringe benefit to minimise FBT payable to the ATO for providing entertainment and meals. The most common entertainment fringe benefits are Christmas parties, events, and team lunches. There are other expenditures that can be categorised as fringe benefits however, it’s best to select the one that did benefit your business the most.

Expense Payment Fringe Benefits
You will provide an expense payment benefit to your employees if any expense is incurred by them and you do either of the following: 

  • Reimburse them for the expenses;
  • Pay a third party for the expenses.

The expenses need to be incurred by the employee regardless of whether it is business or
private expenses or a combination of both.

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