You only pay fringe benefit tax (FBT) on unclassified benefits and gift cards once their taxable value is more than a certain amount, called a limit.
When you need to pay
If the taxable value of unclassified benefits and gift cards is more than the per employee or annual limit, you must pay FBT on the full amount.
If the taxable value is less than or the same as these limits, you do not pay FBT.
There are 2 limits:
- per employee
- annual for all employees.
Per employee limit
The per-employee limits are based on your return period:
- $300 per employee in a quarterly return period
- $1,200 per employee in an income year or annual return period.
A company provides benefits to their employees, Nicole and Bailey, in the March quarter 4 return.
- Benefits provided to Nicole total $195. This is not more than the $300 limit. No FBT is payable for Nicole’s benefits.
- Benefits provided to Bailey total $500. This is more than the $300 limit and FBT applies to the full amount of $500.
The employer includes Nicole and Bailey in their FBT return worksheets but only pays FBT for Bailey’s unclassified benefits.
Annual limit $22,500 for all employees
All unclassified benefits and gift cards must be included in your FBT calculations to check if the total over 4 quarters or a year is more than the $22,500 limit for all employees.
The annual limit applies to:
- quarterly returns
- income year returns
- annual returns.
For income year and annual returns, if the total benefits are more than $22,500, FBT applies to the full amount of benefits provided.
For quarterly returns, if the total benefits for the last 4 quarters including the current quarter, is over $22,500, you must pay FBT on the total benefits provided in the current quarter.
Total benefits include:
- unclassified benefits and gift cards you provide to your employees
- unclassified benefits and gift cards provided by your associated persons to your employees
- benefits you provide to employees of your associated persons
- if you are a company, benefits provided by other companies in your group to employees of the group of companies.
If categories (c) and/or (d) apply, and the benefits provided would be unclassified benefits or gift cards if you had provided them to your employees, they must be included for determining the $22,500 limit.
This means that while (c) and (d) benefits are included for determining the limit, in your FBT return you only need to pay FBT on the unclassified benefits and gift cards provided to your employees.
An employer provides benefits to their employees. In the June quarter, $6,000 in benefits were provided.
Value of benefits in the 3 previous quarters:
| Quarter | Amount |
|---|---|
| March | $8,000 |
| December | $8,000 |
| September | $3,000 |
The total for all 4 quarters including June, is over the annual $22,500 limit. The employer must pay FBT on the full amount of $6,000 in the June quarter.
There are 3 companies in a group. Each company provides benefits to their own employees. The $22,500 limit must be applied across the total of all benefits provided by the group.
| Name | Amount |
|---|---|
| Company A | $9,000 |
| Company B | $8,000 |
| Company C | $7,000 |
| Total benefits | $24,000 |
The total unclassified benefits provided are more than the $22,500 annual limit.
This means all companies in the group must pay FBT on the benefits they each individually provided.