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Fringe benefit tax (FBT)
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Fringe benefit tax (FBT): Fringe benefit tax overview

What is a fringe benefit?

Fringe benefits (perks) include most benefits given to employees in addition to their salary or wages. You should also be aware of attributed and non-attributed benefits.

What is fringe benefit tax?

Fringe benefit tax (FBT) is a tax on benefits that employees receive and enjoy as a result of their employment.  FBT replaces the PAYE tax that would be deducted from the employee if the employee was given the money to purchase the benefit as part of salary or wages instead of the actual benefit.

The four main groups of fringe benefits are:

  • motor vehicles
  • low-interest loans other than low-interest loans provided by life insurance companies
  • free, subsidised or discounted goods and services, including subsidised transport for employers in the public transport business
  • employer contributions to sick, accident or death benefit funds, superannuation schemes and specified insurance policies.

Gifts, prizes and other goods are fringe benefits. If you pay for your employees' entertainment or private telecommunications use, these benefits may also be liable for fringe benefit tax.

Benefits in all these categories are liable for fringe benefit tax (although see each individual category for exceptions). They may be attributed or non-attributed benefits.

Benefits that are not liable for fringe benefit tax include:

  • cash remuneration (eg, salary and wages, lump sums, bonuses, schedular payments (formerly withholding payments), interest and dividends)
  • benefits given instead of a non-taxable cash allowance (for example, a meal given instead of a meal allowance)
  • free board and lodging
  • some forms of entertainment
  • private use of employer owned or leased business tools where they are primarily for business purposes and the cost price of each tool does not exceed $5,000
  • benefits arising from health and safety obligations and the minimising of hazards as identified in the Health and Safety in Employment Act ie health checks will be exempt regardless of whether the check is undertaken at the employers premises or not.


The following exemptions are available:

Free, subsidised, or discounted goods and services:

  • $300 exemption per employee per quarter or maximum exemption of $22,500 per annum for all employees
  • For annual and income year filers the exemption is $1,200.00 per employee per year and $22,500 per year for all employees