A fringe benefit is a ‘payment’ to an employee, but in a different form to salary or wages.
According to the FBT legislation, a fringe benefit is a benefit provided in respect of employment. This effectively means a benefit is provided to somebody because they are an employee. The employee may even be a former or future employee.
An employee is a person who is, was, or will be entitled, to receive salary or wages, or benefits in lieu of salary and wages. Benefits provided in respect of someone who has died are not fringe benefits as a deceased person does not meet the definition of ’employee’ in the FBT legislation.
The terms ‘benefit’ and ‘fringe benefit’ have broad meanings for FBT purposes. Benefits include rights, privileges or services.
As a guide to whether a benefit is provided in respect of employment, ask yourself whether you would have provided the benefit if the person had not been an employee. When we refer to ‘you’ in this Guide, we are referring to you as an employer.
To simplify the explanations in this Guide, we generally discuss examples where the fringe benefit is provided directly by an employer to an employee. However, a fringe benefit may be provided by an associate of the employer or under an arrangement between a third party and the employer. It may also be provided to an associate of the employee (for example, a relative).
The following checklist will help you work out if you are already providing a fringe benefit to your employees. If any of the following apply, you may have an FBT liability.
- Do you hold any cars or other vehicles that are available to employees for their private use, including a car garaged at the employees’ place of residence?
- Do you provide loans at reduced interest rates to employees?
- Have you released an employee from a debt?
- Have you paid for, or reimbursed, an employee’s non-business expense?
- Do you provide a house or other accommodation to your employees?
- Do you provide employees with living-away-from-home allowances?
- Do you provide entertainment including food, drink or recreation to your employees?
- Do any of your employees have a salary package arrangement in place?
- Have you provided your employees with goods at a lower price than they are normally sold to the public?
Fringe benefits have been categorised into 13 different types so that specific valuation rules can be used. These benefits are dealt with separately in their respective chapters in this Guide.
A number of benefits are exempt from FBT. These include certain benefits provided by religious institutions and benefits provided by some international organisations and public benevolent institutions. In addition, there are some specific types of benefits that are exempt from FBT.
There are also a range of concessions available. Some of these concessions reduce the taxable value of a fringe benefit to nil, whereas others provide only a partial reduction. The concessions relevant to each type of benefit are listed in the respective chapters of this guide.