Fringe benefits tax
A tax paid by employers on non-cash benefits given to staff, such as a car, parking or entertainment.
FBT is levied on the employer, not the employee, and runs on its own year from 1 April to 31 March. It exists to stop remuneration being repackaged as untaxed perks.
Common fringe benefits include a company car available for private use, car parking, low-interest loans, school fees, and entertainment. Some benefits are exempt, including certain work-related portable electronic devices and protective clothing.
Although the employer pays it, employees feel the effect. Reportable fringe benefits appear on your income statement and are added back when working out HECS repayments, the Medicare Levy Surcharge, and family assistance entitlements.
Why your perks show up on your income statement
A novated lease can create a reportable fringe benefits amount. It is not taxed as your income, but it raises the income figures used to test your HECS repayment and surcharge liability.
The bit people get wrong
Salary packaging arrangements that look tax-free can quietly increase your HECS repayment and reduce family benefits, because reportable fringe benefits are added back for those tests even though no income tax is charged on them.
Common questions
Do I pay FBT?
No, your employer does. But the benefit may be reported against your name and affect income-tested obligations and entitlements.
Are electric vehicles exempt from FBT?
Eligible zero and low emissions vehicles under the luxury car tax threshold have attracted an FBT exemption, subject to conditions and changing eligibility dates. Check the current rules before relying on it.
Why do charity employees get better packaging deals?
Public benevolent institutions and some health employers have access to FBT concessions with capped exempt amounts, letting staff package part of their salary free of FBT. It is a genuine advantage of working in those sectors.