Fringe Benefits Tax (FBT)
Fringe Benefits Tax (FBT) is an Australian tax paid by employers on certain benefits provided to employees or their associates because of employment.
A fringe benefit is broadly a form of employee remuneration other than ordinary salary or wages. Examples can include private use of a work car, a discounted loan, entertainment, car parking, a gym membership or payment of a private expense.
FBT is separate from employee income tax, payroll tax and GST. The Australian FBT year runs from 1 April to 31 March, rather than following the usual 1 July to 30 June income year.
Where Fringe Benefits Tax Appears
You may see FBT in:
- vehicle logbooks and private-use records
- employee reimbursements and expense declarations
- salary sacrifice arrangements
- entertainment, parking, loan and housing records
- payroll reports and employee income statements
- the employer’s annual FBT workpapers and return
The ATO’s FBT overview is the official starting point for benefit categories, exemptions, valuation and employer obligations.
What May And May Not Be A Fringe Benefit
| Item | Typical FBT Question | Important Distinction |
|---|---|---|
| Private Use Of A Work Car | Does a car fringe benefit arise and how is it valued? | Business ownership of the car does not make private use automatically exempt |
| Employee Expense Reimbursement | Is it an expense-payment benefit or does a reduction apply? | A valid business expense and a private expense can be treated differently |
| Salary-Sacrificed Super | Is the contribution paid to a complying fund? | Qualifying employer super contributions are not fringe benefits |
| Salary And Wages | Is the amount ordinary cash remuneration? | Salary and wages are subject to payroll and income-tax rules, not FBT |
Not every employee perk, reimbursement or salary-packaged item creates FBT. Exemptions, concessions and the “otherwise deductible” rule may reduce or remove the taxable value, but each benefit and its evidence need to be checked.
How Fringe Benefits Tax Works In Practice
An employer generally needs to:
- identify benefits provided to employees or their associates
- place each benefit in the correct FBT category
- determine its taxable value
- apply any valid exemption, concession or reduction
- gross up the taxable value and calculate any FBT liability
- keep the required calculations, declarations and supporting records
- lodge and pay, and report employee amounts where required
“Grossing up” converts the taxable value into the pre-tax salary an employee would broadly need to buy the benefit themselves. Because the calculation differs by benefit and GST-credit treatment, a generic percentage applied to the purchase price is not reliable.
Simple Example
A company lets an employee use a work car privately on weekends. The company records when the car was available, the relevant costs and any employee contribution.
The private availability may create a car fringe benefit. The employer then checks the valuation method and any exemption or reduction before calculating FBT. The car’s purchase price or monthly running cost alone is not the FBT amount.
Employer FBT Versus Employee Reporting
The employer pays any FBT liability. If certain reportable benefits for an employee exceed the reporting threshold, the employer may also need to show a grossed-up reportable fringe benefits amount in the employee’s end-of-year information.
The ATO’s reportable fringe benefits guidance explains that this reported amount is not added to the employee’s taxable income, although it can affect some income tests and obligations.
Why Fringe Benefits Tax Matters
FBT can change the real employer cost of vehicles, entertainment, reimbursements and salary packages. Missing private use or incomplete declarations can understate the liability, while assuming every benefit is taxable can overstate it.
FBT records also cross several systems: payroll, supplier bills, fixed assets, employee declarations and the general ledger. Reviewing them together makes the annual calculation more reliable.
Regional Variations
This page covers Australian FBT. New Zealand also uses the term “fringe benefit tax”, but its filing, valuation, rate and exemption rules differ. Other markets may use “benefits in kind” or “taxable benefits”; those regimes are not interchangeable with Australian FBT.
How Gimbla Can Help
Gimbla can keep vehicle costs, employee reimbursements, supplier bills, payroll entries and supporting documents together in the accounts. Those records can support an FBT review, but the benefit classification and tax calculation should follow current ATO guidance or professional advice.
Related Terms
Helpful Gimbla Guides
In Short
FBT is an Australian employer tax on certain employment benefits provided outside ordinary salary and wages. Employers must identify, value, document and report benefits under rules that are separate from income tax, payroll tax and GST.