A fringe benefit is a ‘payment’ to an employee, but in a different form to salary and wages. Benefits include rights, privileges or services. For example, a fringe benefit may be provided when an employer:
allows an employee to use a work car for private purposes
gives an employee a cheap loan, or
pays an employee’s private health insurance costs.
Some employers, including charities, will need to distinguish between employees, volunteers and independent contractors. For the purposes of FBT, an employee is a person who receives (or is entitled to receive) salary or wages, or a benefit that has been provided in respect of their employment. A volunteer is not paid for work. Reimbursing a volunteer for out-of-pocket expenses does not cause them to become an employee. Generally benefits provided to volunteers do not attract FBT.
If an organisation provides non-cash benefits to workers in lieu of salary and wages, FBT can apply.
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