What is Fringe Benefits Tax and how does it apply to me?
Mar 25, 2022Have you ever asked yourself, "What is Fringe Benefits Tax (FBT) and how does it apply to me? "
The truth is that fringe benefits tax is a very complicated tax but we're going to make it simple for you. In this blog post, We're am going to teach you everything that you need to know about fringe benefits tax!
FBT is the tax on the rewards you get for being an employee that is non-cash.
You see, when an employer pays an employee, they hold aside taxes, and this is paid to the ATO, for when the employee lodges their tax return.
If you aren't paid traditionally with wages, then FBT kicks in to put the tax on to the employer for not paying the employee properly (via wages with tax and super).
Some examples include:
- providing a company car
- giving tickets to a sporting game
- fancy weekends away
- providing free gym memberships
- providing free or low-cost health insurance
- providing flights for holidays
- providing housing
- providing anything else that is not classed as wages and taxed accordingly.
If you are an employer - you will pay the FBT tax at a tax rate of 47% after some weird calculations are made (grossing up - depending on if the thing you have paid has GST or not).
If you are an employee, then the value of the thing that you received may show on your income statement, and form part of your income for the year. While you do not pay income tax on this amount, it may form part of your total income calculation for other purposes.
If you provide non-cash benefits to your staff, contact us to see if you need to prepare a Fringe benefits tax return for the year from 1 April to 31st March.
Are you an employer in a remote location? Do you pay allowances or benefits to your employees?
If yes, then grab this chance to download this valuable handbook for free.
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