Fringe Benefits Tax (FBT) in Australia

Understanding Your FBT Obligations as an Employer

Fringe Benefits Tax (FBT) is a tax payable by employers on certain non-cash benefits provided to employees — or their associates — in place of salary or wages. These benefits can be provided directly by the employer, by an associate, or through a third party under an arrangement with the employer.

The tax is separate from income tax and is calculated on the taxable value of the fringe benefits provided.

Who is Considered an Employee for FBT?

FBT applies to:

  • Current, former, or future employees

  • Associates of employees (e.g. spouses or children)

  • Benefits provided as part of employment or in connection with work-related duties

FBT Rate and Gross-Up Calculation

For the FBT year ending 31 March 2024, the FBT rate is 47%, which aligns with the highest individual marginal tax rate including the Medicare Levy.

To ensure equity with after-tax income, the ATO applies a gross-up formula, based on whether GST credits can be claimed on the benefit. This calculation reflects the gross salary an employee would need to earn (after income tax) to purchase the benefit.

Gross-Up Rates (2024)

  • Type 1 (GST credit available): 2.0802

  • Type 2 (No GST credit): 1.8868

Common Fringe Benefit Categories (with Examples)

1. Car Benefits

Providing an employee with a vehicle for private use (including home-to-work travel).
💡 Example: A company car used by a sales rep for both work and personal travel.

Valuation methods:

  • Statutory formula method – based on the car’s cost and annual kilometres

  • Operating cost method – based on actual costs and personal usage

2. Car Parking

FBT applies if an employer provides a car parking space at or near the workplace.
💡 Example: An employee is allocated a reserved parking bay at a nearby commercial lot.

3. Expense Payments

Covering or reimbursing an employee’s private expenses.
💡 Example: Paying an employee’s personal phone or gym membership fees.

4. Housing Benefits

Providing housing that is the employee’s usual place of residence.
💡 Example: An employer provides rent-free accommodation in a remote location.

5. Living-Away-From-Home Allowance (LAFHA)

A cash allowance for employees required to work away from their usual residence, to cover accommodation and food.
💡 Example: A project manager is paid a LAFHA while on a temporary assignment interstate.

6. Loan Benefits

Providing interest-free or low-interest loans to employees.
💡 Example: An employer loans $10,000 to an employee at a discounted rate.

7. Meal Entertainment

Providing meals or entertainment (e.g. restaurant meals, staff parties).
💡 Example: A company hosts a Christmas dinner for employees and their partners.

8. Property Benefits

Providing goods at a discount or for free.
💡 Example: An electronics retailer allows staff to purchase items below cost price.

9. Residual Benefits

Covers any benefit not covered by other categories.
💡 Example: Providing free airport transfers or personal use of company assets.

Exemptions, Concessions & Tax Planning

The FBT system includes several exemptions and concessions to reduce or eliminate liability, including:

  • Minor benefits (under $300 and infrequent)

  • Portable electronic devices used primarily for work

  • Remote area housing and certain relocation expenses

  • Work-related items like tools or protective clothing

Employees can also make post-tax contributions (e.g. paying part of the car’s private use costs), which can reduce the FBT payable.

Reporting and Lodging FBT

  • The FBT year runs from 1 April to 31 March.

  • Annual FBT returns are due by 21 May each year (extensions may apply for tax agents).

  • If your FBT liability exceeds $3,000, you must pay quarterly instalments via your Activity Statement.

  • If the grossed-up value of reportable fringe benefits exceeds $2,000 per employee, you must report it on their income statement (STP-enabled payroll systems).

How We Help

At Complete Tax & Financial Services, we support businesses by:

✔ Identifying taxable benefits and exemptions
✔ Calculating and minimising FBT liability
✔ Assisting with employee contribution strategies
✔ Preparing and lodging FBT returns
✔ Ensuring compliance with ATO rules and changes

📞 Contact us today to streamline your FBT obligations and ensure you're not paying more tax than necessary.

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