Are you an aspiring tax lawyer? Have you often come across the terms FBT year, FBT in remuneration and similar ones that include F, B, and T? Do you often wonder what is FBT and how is it relevant to your taxation theory courses? My Assignment Services’ law assignment help expert tells you everything you should know about FBT!
Fringe Benefits Tax, or FBT, is a tax that employers pay on selected benefits they offer to their employees. These benefits also include and extend to the family of the employee or associates.
The benefits of the employers may be a part of the salary of the employee. Also, if the employer wishes, the benefits can be in addition to the salary.
No, Fringe Benefits Tax is separate from the income tax and are calculated on the value of the fringe benefits provided.
The income tax is a tax paid on the income you are earning. FBT, on the other hand, is a tax that is paid on the total value of the benefits that the employee is enjoying from the employer.
In Australian employment, one FBT year runs from 1 April to 31 March.
The Australian Taxation Office has identified 11 different categories under which we can classify all types of fringe benefits provided by an employer.
They are -
Car parking fringe benefits
Car fringe benefits
Expense payment fringe benefits
Entertainment and fringe benefits
Loan fringe benefits
Housing fringe benefits
Living away from home allowance fringe benefits
Debt waiver fringe benefits
Board fringe benefits
Residual fringe benefits
Property fringe benefits
Let us discuss a few of these.
A car parking fringe benefit is when the employer gives the employees car parking and all the conditions mentioned below are met -
The car should be parked in a space that is owned by, leased by or is in the control of, the employer.
The time for which the car is parked is more than 4 hours and is parked between 7 am and 7 pm.
The car is owned by, leased by or is in the control of, the employee or is provided by the employer.
The parking is provided because of the employee’s employment.
The car should be parked either in the place of employment or near that.
The employee is using the car to travel from home to work or work to home at least once on that day.
There is a commercial parking station within one-kilometre radius which charges fees for all day parking.
If you observe, you will see that there are a lot of companies who offer expenses allowance to their employees. Kind of a situation like “This meal is on the house”. They are called expense payment benefit.
These benefits are rolled out when the employee incurs an expense and the employer -
Either reimburse the payment for the expense
Or pays a third-party member for the expense
The expense can be personal or work related or a combination of both. The condition is that the expense has to be incurred by the employee. If the payment was done by the employee but was incurred indirectly by the employer, it is not an expense payment benefit. For example, the use of a corporate credit card.
If the employer is providing accommodation to the employee, either rent-free or at a reduced rent and the accommodation is the usual place of residence of the employee, then this is counted as a housing fringe benefit.
What accommodation units are accepted in this benefit section?
A house, apartment or home unit
Accommodation in a motel, hotel, bunkhouse, guest house or living quarters
A mobile home or a caravan
Accommodation on a ship or some other floating structure (yes, spaceships also)
But remember that if the employer provides accommodation to the employee in a remote location, it may be exempted from the FBT.
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Starting as a law professional, Ashley often made time to help her juniors and peers with their queries and academic needs. She joined the team of My Assignment Services as a law assignment writing expert after completing her postgraduation. Her area of expertise ranges from business law, contract law, employment law, criminal law, tort law, etc. and have been seeing students excel under her guidance. She has also contributed articles and advice to the Law Council of Australia. She practiced law for 5 years as a freelance lawyer before becoming an academic advisor.
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