If your business engages employees then you probably know that any extra benefit you make or pay to an employee is treated as a fringe benefit and subject to fringe benefits tax (FBT). In other words, If you provide a benefit to a person because of their employment, then it is probably a Fringe Benefit.
This means that addition to receiving salary and wages, there are additional benefits provided to an employee which have a dollar value. Thus, if you make a payment in the form of a gift card, event tickets or karate lessons, this may be treated as a fringe benefit
Fringe Benefits Tax is calculated on a different year to Income Tax. Thus, the Fringe Benefits Tax year runs separately to the financial year, which is from the 1 April to 31 March.
Common Fringe Benefit Exemptions
There are a number of FBT exemptions, particularly in relation to “minor” benefits.
Minor Benefits (Five Factor test) –
A commercial vehicle such as a taxi, van or utility vehicle is exempt from Fringe Benefits Tax, if their private use is limited to travel between home and work, incidental travel in the course of employment or non-work-related use that is minor ie infrequent and irregular.
Work Related Items
Portable electronic devices, Personal protective clothing and Tools of trade are exempt from FBT provides that the items are limited to primary use of employment and is limited to one item per FBT year per employee.
Taxi and Ride-sharing
Employee travel for single trip beginning or ending at their nominated place of work is exempt.