11 Jun Fringe Benefits Tax: A guide for employers
Fringe Benefits Tax: A guide for employers
As an employer, it is your obligation to be familiar with fringe benefits tax, what are reportable fringe benefits and exempt reportable fringe benefits.
To help you out, we’ve gathered all relevant information for employers with Fringe Benefits Tax: A Guide for Employers.
Stay up to date with this comprehensive guide explaining everything you need to know about fringe benefits tax.
What is fringe benefits tax?
Simply put, fringe benefits refers to benefits provided to an employee, in a different form to wages and salaries.
When an employer gifts their employee a fringe benefit, he or she must pay tax on that benefit.
The purpose of Fringe Benefits is to motivate and retain more employees.
So although fringe benefits come with tax to be paid, the result is a happier, more productive workforce which often outweighs the tax price.
However, as an incentive to employers to gift fringe benefits, they can generally claim an income tax deduction for the cost of providing fringe benefits and the fringe benefits tax they pay.
It’s also common for employers to claim GST credits for items purchased as fringe benefits.
What are reportable fringe benefits?
For the purposes of fringe benefits tax, an employee is considered as:
- A current, future or past employee
- The director of a company
- Or the beneficiary of a trust who works in the business
Some common examples of benefits given to an employee, legally classified as fringe benefits include:
- Reimbursing an employee’s expenses such as tuition fees or childcare costs
- Covering entertainment expenses such as tickets to a show, accommodation, food and drinks
- Providing an employee with a business car for private leisure purpose
- Giving an employee a discounted loan
- Reimbursing an employee’s gym membership fees or private health insurance
Reportable fringe benefits amount
As an employer, you will be obliged to record the grossed-up taxable value of each of your fringe benefits.
This amount is known as reportable fringe benefits amount (RFBA) and should be reported through Single Touch Payroll.
The fringe benefits tax year falls between 1st April and 31st March and therefore, is when you will be expected to report on your fringe benefits.
For more information on reportable fringe benefits amount, contact the team of fringe benefits professionals at Simmons Livingstone & Associates.
Exempt reportable fringe benefits
Exempt reportable fringe benefits are reportable fringe benefits received from a not for profit organisation which is legally eligible for a fringe benefits tax exemption under the Fringe Benefits Tax Assessment Act 1986.
The reportable fringe benefits exemptions are also considered under these circumstances as outlined by the Australian Tax Office:
- Registered public benevolent institutions endorsed by the Commissioner as eligible for exemption from fringe benefits tax
- government bodies where the employee’s duties are exclusively performed in or in connection with
- a public hospital, or
- a hospital carried on by a society or association that is a rebatable employer
- registered health promotion charities endorsed by the Commissioner as eligible for exemption from fringe benefits tax, or
- public ambulance services and the employee is predominantly involved in providing that service.
For more information about fringe benefits tax
We’re here to help you wherever possible to ensure you are fully equipped with your understanding of fringe benefits tax.
Contact the experts at Simmons Livingstone & Associates and let us help you fully understand your obligations as an employer.