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  • Reducing your FBT liability

    Employers can reduce their FBT liability by:

    Providing benefits that are income tax deductible

    You may not have an FBT liability if you give an employee a benefit that they would otherwise have been able to claim as an income tax deduction.

    Example: benefit where the employee is entitled to an income tax deduction

    Sue, the manager of a hairdressing salon, pays for two senior stylists to attend a hair colouring seminar run by a hairdressing association. The course, paid for by the business, is to reward the senior stylists for their work performance over the last year.

    There is no FBT payable because the two employees would be entitled to a full income tax deduction for the cost of attending the course, if they had paid for it themselves.

    End of example

    Using employee contributions

    You can reduce your FBT liability by having your employee contribute towards the cost of a fringe benefit.

    The contribution is usually a cash payment made to you or the person who provided the benefit. Under the valuation rules for most categories of fringe benefits, the taxable value of a fringe benefit can be reduced by the amount of the employee contribution.

    Example: employer uses employee contributions

    A company golf team has a golfing day once a month and a golfing day with clients once a quarter. The employer pays the green fees of $45 a month, with the employees reimbursing the employer 75% of the fees. The employer will only have to pay FBT on the 25% of the green fees that are not reimbursed.

    End of example

    Providing a cash bonus

    If you provide your employee with a cash bonus instead of a benefit you won't have to pay FBT, and the employee will pay income tax on the amount.

    See also:

    Last modified: 29 Mar 2019QC 43871