Fringe Benefits Tax

We know that Fringe Benefits Tax (FBT) is both uncommon for businesses and not at the front of mind for many clients – but it is something that must be complied with. As always, we endeavour to make this process as smooth as possible; therefore, we have provided the below summary on some critical areas regarding FBT.

Fringe Benefits Tax Rate

For the 2023 FBT Year the FBT tax rate is set at 47%, this is aligned with the top individual marginal tax rate.

Reportable Fringe Benefits

If you provide certain fringe benefits with a total taxable value of more than $2,000 in the FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee’s payment summary for the corresponding income year.

Please note that the FBT gross up rates are:

Type 1 Benefits: 2.0802

Type 2 Benefits: 1.8868

Standard Forms:

Should you require additional fringe benefits tax forms, they are listed below (click to download):

FORM 1 Blank copy of the Fringe Benefits questionnaire Download Download	FORM 2 Entertainment and recreation expenses schedule Download Download
FORM 3 Form for vehicles held at 31 March 2023 or sold during the year (include odometer readings, logbook percentage and operating costs if necessary. Download Download	FORM 4 Form for vehicles purchased after 1 April 2022 (include details of both the cost of the vehicle or the sale of the vehicle and the necessary declarations for both the operating and statutory method). Download Download
FORM 5 Logbook Checklist Download Download	FORM 6 Expenses Payments Schedule Download Download

Loan Fringe Benefits

A Loan benefit arises when a loan is made to an employee (or associate), either without interest or at a rate lower than the benchmark statutory rate (currently 4.52% p.a. for the year ended 31 March 2023, was 4.52% p.a. 2022, was 4.80% p.a. in 2021)

Expense Payment Benefits

The general rule is that private expenses paid for, or reimbursed, on behalf of employees or their families are treated as expense benefits and subject to FBT. Typical example includes the payment or reimbursement of mortgage payments, school fees and holiday expenses.

Car Parking Benefits

Broadly speaking, a car parking benefit arises when an employer provides parking for employees, for more than 4 hrs between 7 am and 7 pm, in a commercial car park which charges more than $9.72 per day (2022 – $9.25).

The ATO has advised that a car parking benefit will not arise during any period in which all commercial parking stations within a one-kilometre radius of where a car is parked have closed, or are providing free parking, during the COVID-19 lockdowns or the lowest fee charged for all-day parking by any commercial parking stations within a one-kilometre radius does not exceed the car parking threshold or $9.72 for 2023 FBT year on 1 April 2022.

(If your business turnover exceeds $10 million for the year, this test is extended to any car park owned or leased by the business, such as in the basement of the business premises).

Minor Benefits

Minor Benefits are exempt from FBT if they are provided infrequently and irregularly to employees (or associates), and the value of the benefit is less than $300 (GST inclusive). However, no GST is claimable nor is it tax deductible but the exemption might be more beneficial.

The most common situation where this exemption is applied is in relation to the staff Christmas party. However, please note that an employer is not entitled to use the minor benefit exemption if an election has been made to use the 50/50 split method to calculate FBT liability for meal entertainment benefits.

Meal Entertainment Benefits

Broadly speaking, a car parking benefit arises when an employer provides parking for employees, for more than 4 hrs between 7 am and 7 pm, in a commercial car park which charges more than $9.72 per day (2022 – $9.25).

The ATO has advised that a car parking benefit will not arise during any period in which all commercial parking stations within a one-kilometre radius of where a car is parked have closed, or are providing free parking, during the COVID-19 lockdowns or the lowest fee charged for all-day parking by any commercial parking stations within a one-kilometre radius does not exceed the car parking threshold or $9.72 for 2023 FBT year on 1 April 2022.

(If your business turnover exceeds $10 million for the year, this test is extended to any car park owned or leased by the business, such as in the basement of the business premises).

Fringe Benefits Tax