Fringe benefits categories
FBT law identifies various categories of fringe benefits and specific valuation rules for each category.
To simplify the descriptions, the following categories refer only to you and your employee. However, they can equally apply where the benefit is provided:
- by a third party under an arrangement with you
- to an associate of your employee.
Car fringe benefits
If you make a car you own or lease available for the private use of your employee, you may provide a car fringe benefit. For FBT purposes, a car is any of the following:
- a sedan, station wagon, panel van or utility (including four-wheel drive vehicles)
- any other goods-carrying vehicle with a carrying capacity of less than one tonne
- any other passenger-carrying vehicle designed to carry fewer than nine passengers.
If the vehicle provided doesn't meet the definition of a car fringe benefit and your employee has private use of the vehicle, the right to use the vehicle is called a residual fringe benefit.
A car is taken to be made available for private use by your employee on any day when either of the following apply:
- it is actually used for private purposes
- the car is available for the private use.
If a car is garaged at or near your employee's home, it is taken to be available for their private use, regardless of whether or not they have permission to use the car privately.
As a general rule, travel to and from work is private use of a vehicle.
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For an explanation of when the use of certain motor vehicles is exempt from FBT, and a list of vehicles that may qualify for the exemption and those that do not, refer to Fringe benefits tax - exempt car benefits.
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Loan fringe benefits
You provide a loan fringe benefit if you give your employee a loan and charge no interest or a low rate of interest. A low rate of interest is one that is less than the statutory rate of interest. This rate is published in a tax determination each year, usually in April.
Debt waiver fringe benefits
You provide a debt waiver fringe benefit if you waive or forgive your employee's debt. For example, if you sell goods to an employee and later tell them not to bother about paying the invoiced amount, you have provided a debt waiver fringe benefit. However, an employee debt that you write off as a genuine bad debt is not a debt waiver fringe benefit.
Expense payment fringe benefits
You may provide an expense payment benefit if an employee incurs expenses and you do either of the following:
- reimburse them for the expenses
- pay a third party for the expenses.
The expenses can be business or private expenses or a combination of both, but they need to be incurred by the employee.
If you incur the expense, for example through a corporate credit card, you don't have an expense payment fringe benefit. You could, however, have a property, residual or entertainment fringe benefit, depending on what is paid for.
Housing fringe benefits
A housing fringe benefit may arise when you provide accommodation to your employee rent-free or at a reduced rent where that accommodation is their usual place of residence.
A unit of accommodation includes any of the following:
- a house, flat or home unit
- accommodation in a hotel, motel, guesthouse, bunkhouse or other living quarters
- a caravan or mobile home
- accommodation on a ship or other floating structure.
Accommodation provided to your employee in remote areas may be exempt from fringe benefits tax.
Board fringe benefits
A board fringe benefit may arise if you provide your employee with accommodation and there is an entitlement to at least two meals a day. The meals may be a board fringe benefit. For example:
- meals provided in a dining facility located on a remote construction site, oil rig or ship
- meals provided to a live-in housekeeper or to resident teachers in a boarding school.
Airline transport fringe benefits
If you are an airline or travel agent and you provide free or discounted air travel on a stand-by basis to your employees, an airline transport fringe benefit may arise.
Living-away-from-home allowance fringe benefits
A living-away-from-home allowance fringe benefit may arise if you pay an allowance to your employee to cover additional expenses incurred because they are temporarily required to live away from their usual place of residence in order to perform duties of employment.
Providing entertainment
Provision of entertainment means providing entertainment by way of food, drink or recreation. There is no category of fringe benefit called an entertainment fringe benefit, but the following types of fringe benefits may arise from providing entertainment:
- an expense payment fringe benefit, for example, the cost of theatre tickets purchased by your employee and you reimburse them
- a property fringe benefit, for example, providing food and drink
- a residual fringe benefit, for example, providing accommodation or transport in connection with such entertainment, or
- a tax-exempt body entertainment fringe benefit (only if you are exempt from income tax).
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For more information on how FBT and entertainment works, and to decide whether or not you may have to pay FBT, refer to:
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Tax-exempt body entertainment fringe benefits
A tax-exempt body entertainment fringe benefit may arise if you are wholly or partially exempt from income tax and provide your employee with entertainment by way of food, drink or recreation. Accommodation or travel provided in connection with such entertainment is also deemed to be entertainment.
Car parking fringe benefits
A car parking fringe benefit may arise if you provide car parking to your employee and:
- there is a commercial car parking station within a one kilometre radius of where the car is parked
- that commercial car parking station charges a fee for all day parking that is more than the car parking threshold.
The car parking threshold is indexed in line with the consumer pricing index. It is announced each year in a taxation determination, usually published during April.
Small business car parking exemption
Car parking benefits provided by small business employers are exempt if:
- you were a small business for the last income year before the relevant FBT year, or
- your total gross income (before any deductions) for the last financial year before the relevant FBT year is less than $10 million.
The car parking must not be provided in a commercial car park, and you can't be a:
- government body
- listed public company, or
- subsidiary of a listed public company.
Property fringe benefits
A property fringe benefit may arise when you provide your employee with property, either free or at a discount. For FBT purposes, property includes:
- all goods, for example, items of clothing or a cylinder of heating gas
- real property, for example, land and buildings
- other property, for example, shares or bonds.
Residual fringe benefits
A fringe benefit that is not subject to any of the previously discussed categories is called a residual fringe benefit. A residual fringe benefit may arise when you provide an employee with any right (such as a privilege, service or facility) that is not one of the specific types of fringe benefits already mentioned previously.
Some examples of residual fringe benefits are:
- use of employer's property, for example, video camera or television
- provision of a service, for example, advice given by a solicitor, and
- private use of a motor vehicle that is not a 'car' for FBT purposes, for example, a one tonne utility.
Last Modified: Thursday, 8 October 2009