Does Fringe Benefit Tax give you a headache?

Jul 6, 2020

In 1986 Australia brought in the dreaded Fringe Benefit Tax (FBT). This prevented businesses from living a lavish lifestyle and having their business pay for their expenses, resulting in additional tax deductions that weren’t necessarily allowed.

The most obvious expenses would be lunches, entertainment, work parties, motor vehicles used for personal usage, and other non-business expenses paid on behalf of directors.

FBT is an expensive tax (47%) that businesses are liable for if they pay for anything that provides a personal benefit to employees or directors.

As an example, if an employee used the company credit card to pay for their family to go out for dinner, costing $100. This would then cost the company an additional $47, making the outing a total of $147. This can become quite expensive over the course of a financial year, especially when cars are involved.

Some employers are able to provide some personal benefits to employees under certain/limited circumstances. We recommend that employers speak with an FBT specialist before organising such benefits as it can become an expensive exercise to get wrong.

If you would like to find out what personal benefits you are able to provide your employees, please don’t hesitate to contact us.

Disclaimer:

The information provided in this blog is general in nature and does not take into account your individual objectives, financial situation or needs. It is not intended to be personal financial, legal, taxation, or investment advice. Before making any decisions, we recommend seeking advice from a licensed financial adviser who understands your specific circumstances. While every effort is made to ensure the information is accurate at the time of publication, Financial Advisers Australia makes no guarantees and accepts no responsibility for any loss arising from reliance on this content.