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Fringe Benefits Tax

In 1986 the Australian Government introduced Fringe Benefits Tax to catch in the tax net those non-cash benefits paid to employees, particularly executives, which otherwise would not have attracted income tax as the benefits were provided to the employee rather than the employee paying for them out of their after tax salary.

These benefits included motor vehicles for the employee and their partner, private school tuition fees, holidays and the like.

Fringe Benefits Tax is paid by the employer, with many employees required by the employer to contribute to this cost.  There is no income tax consequence for the employee but a figure called the reportable fringe benefits amount is reported on the employees group certificate and is included for calculation of government benefits such as family tax benefit and child care benefit.

Fringe Benefits Tax is paid at the highest marginal tax rate being 46.5%, and is calculated on what is termed the grossed up value of the benefits.  This means that, in general terms, the amount of fringe benefits tax paid is roughly equal to the private portion of the benefit provided.  For example, if a vehicle is provided to an employee and its total running and holding cost is $10,000 with 20% private use, the fringe benefits tax payable will be roughly $2,000 (20% * $10,000).

There are many items which are enveloped in the fringe benefits tax net.  For an information sheet and checklist please download  Cliftons Fringe Benefits Tax - Information Checklist (PDF 35KB)

Cliftons are THE Business Specialists who can help with your fringe benefits tax queries.  Contact Us for advice and assistance.