Payments or other financial benefits provided to employees that aren't considered salary or wages may constitute fringe benefits.
References to employers and employees equally apply where the benefit is provided by a third party under an arrangement with the employer, or is provided to an associate of the employee.
Payments to worker entitlement funds are exempt from FBT.
Expense payment benefits
An employer may provide an expense payment fringe benefit if their employee incurs expenses and the employer either:
- reimburses them for the expenses
- pays a third party for the expenses.
The expenses can be business or private expenses, or a combination of both, but they must be incurred by the employee.
If the employer incurs the expense directly or purchases using a corporate credit card, they are not providing an expense payment fringe benefit. They could, however, have provided a property, residual or entertainment fringe benefit.
Generally, the taxable value of an expense payment fringe benefit is the amount of the payment or reimbursement the employer makes.
There are a range of exemptions applying to expense payment fringe benefits.
An employer provides a loan fringe benefit if they give an employee a loan and charge no interest or a low rate of interest (that is, lower than the statutory rate of interest, which is published in a tax determination each year, usually in April).
In some circumstances a loan benefit may be exempt from FBT.
Debt waiver benefits
An employer provides a debt waiver fringe benefit if they waive or forgive an employee’s debt. For example, if they sell goods to an employee and later tell them not to bother about paying the invoiced amount, they have provided a debt waiver fringe benefit. However, an employee debt that an employer writes off as a genuine bad debt is not a debt waiver fringe benefit.