Fringe benefit tax (FBT) is a tax payable when the following benefits are supplied to employees or shareholder-employees:
- motor vehicles available for private use
- low interest/interest-free loans
- free, subsidised or discounted goods and services
- employer contributions to sick, accident or death benefit funds, superannuation schemes and specified insurance policies (excluding employer contributions to superannuation schemes liable for ESCT (formerly SSCWT)
- unclassified fringe benefits.
If the above benefits are enjoyed or received by employees as a result of their employment, they are liable for FBT. This could be in a past, present or even future employment. Employers pay tax on benefits provided to employees or shareholder-employees, even if the benefits are provided through another person/entities. Employers also pay FBT if the benefits are provided to or enjoyed by associates of the employees or shareholder employees.
Fringe benefits are different to paying your employees. If you pay your employees cash, treat the payment as part of the employee's salary or wage and make normal employee deductions, such as PAYE.
Entertainment expenses
Some entertainment expenses may be subject to FBT if they are enjoyed or received by employees.
There are some exemptions to FBT.