Employers pay fringe benefits tax (FBT) on certain benefits they provide to their employees or their employees’ associates.
If you are a director and conduct your business through a company or a trust, you may be an employee of the company or trust. In this situation you will need to account for and pay FBT on any fringe benefits you provide to yourself.
Generally, benefits provided to contractors and volunteers don’t attract FBT.
FBT is separate from income tax and is based on the taxable value of the fringe benefits provided.
Benefits can be provided by you, or they can be provided by an associate of yours or a third party under an arrangement with you.
Benefits include rights, privileges and
services. For example, you provide a fringe benefit when you:
- allow an employee to use a work car for private purposes
- give an employee a cheap loan
- pay an employee’s private health insurance costs
- provide cleaning services for an employee’s private residence
- reimburse a nonbusiness expense incurred by your employee (such as school fees or private health insurance)
- provide entertainment by way of food, drink or recreation.
Duration 4m:30s. A transcript of Paying workers - Fringe benefits tax is also available.
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What you need to do
If you provide fringe benefits you will need to: