Fringe Benefits Tax (FBT)

What is Fringe Benefits Tax (FBT)?

Fringe benefits tax (FBT) is a tax paid on certain benefits employers provide to their employees or their employees’ associates.  FBT is separate from income tax and is based on the taxable value of the various fringe benefits provided.

Basically, a fringe benefit is a benefit provided to an employee (or their associate) because that person is an employee.  Benefits can be provided by an employer, an associate of the employer, or by a third party under an arrangement with the employer.  An employee can be a current, future or former employee.

The term ‘benefit’ is broadly defined and includes any rights, privileges, or services.  For example, an employer provides a benefit when they:

  • Allow an employee to use a work car for private purposes
  • Give an employee a cheap loan
  • Reimburse an expense incurred by an employee, such as school fees, or
  • Provide entertainment by way of food, drink or recreation
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