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Fringe benefit tax on specific categories of benefits: Other benefits
Here we cover other benefits employers may provide to employees that are subject to fringe benefit tax under certain conditions:
- expenses for entertainment provided to employees, outside their normal employment duties
- payment for employees' private use of telecommunications, for example, telephone, fax or internet connection in an employee's home, or cellphone or pager costs.
Limitation to charitable organisations' exemption
When a charitable organisation provides a benefit to an employee by way of a short-term charge facility, FBT is payable if it is above the threshold.
Definition of a short-term charge facility
A short-term charge facility arrangement enables an employee to obtain goods or services that have no connection with the employer or its operations by:
- buying or hiring the goods and services, or
- charging the cost of the goods or services to an account, or
- providing consideration other than money for the goods and services
The employer must provide some or all of the payment or other consideration for the goods and services.
Threshold for paying FBT
Up until 31 March, the threshold to pay FBT is 5% of an employee's salary of wages for the year.
From 1 April 2014, the threshold to pay FBT is whichever is the smaller amount of:
- 5% of an employee's salary or wages for the year, or
- $1,200 for the year.
If an employee's salary for the year is:
- $24,000 or more, the threshold for FBT is $1,200.
- less than $24,000 the threshold is 5% of their salary or wages.
Bob earns a yearly salary of $27,000, Jess earns $43,000 and John earns $17,000. They all receive vouchers from their employer, a charitable organistion.
Both Bob and Jess would have a FBT threshold of $1,200 because their income is greater than $24,000 and John would have a threshold of $850 as his is less than $24,000.
For more information, please call us on 0800 377 772.