Fringe benefit tax on specific categories of benefits: Free, subsidised or discounted goods and services
Which services are subject to fringe benefit tax?
Fringe benefit tax is charged on services that an employer (or someone on the employer's behalf) provides to an employee at less than the normal cost to the public. Examples of fringe benefits liable for fringe benefit tax are:
- gifting schemes, eg, long-service awards, incentive vouchers, gifts
- club membership
- accompanying travel by the employee's spouse or family where the cost would have been incurred if the employee had travelled to see their family
- Charitable organisations will not be required to account for FBT where a benefit to an employee by way of a short term credit facilities and the benefit do not exceed 5% of the employees salary and wages.
Note: If the aggregated value of the benefits exceeds the 5% threshold the charitable organisation will need to account for FBT on the short term credit facility which was available to the employee.
Entertainment tax may apply to services that are fringe benefits.
What is the taxable value of services subject to fringe benefit tax?
The taxable value of the fringe benefit is the normal market price of the service provided, less any employee contribution. Use the GST-inclusive price of the service.
If someone else provides the service on behalf of the employer, the taxable value is:
- the amount paid by the employer to that person, where the transaction is at arm's length (that is, not between associated persons), or
- the value of those services to the public, where the transaction is between associated person.
Which services are not subject to fringe benefit tax?
Fringe benefit tax is not charged on:
- A car park provided to the employee, if the car park is on the employer's premises or the employer leases it with exclusive right to the property (just having a licence to occupy does not qualify for an exemption).
- Frequent flier and membership reward schemes where employees join the scheme for their own use (but fringe benefit tax may apply where the employer enters into an arrangement with the promoter of the scheme to benefit employees).
Other pages in: Free, subsidised or discounted goods and services
Date published: 14 Oct 2004