On this page
- What are fringe benefits concessions?
- Rebate for charitable institutions and rebatable employers
- Exemption for health promotion charities, public benevolent institutions (PBIs) and hospital and ambulance services
- Reporting obligations for a health promotion charity or a PBI
- Reporting obligations in relation to employees
What are fringe benefits concessions?
In general terms, fringe benefits tax (FBT) is a tax paid by an employer when it provides non-salary benefits to its employees (or an employee's associate, for example, a family member). This often occurs when an employee chooses to have some of their salary paid in the form of benefits (for example - having some of their salary directed to paying their rent or to paying a car lease).
For FBT purposes, an employee includes a:
- current, future or former employee, or
- director of a company.
The fringe benefit tax rate is 47% for the FBT year 1 April 2022 to 31 March 2023. This is paid by an employer based on the value of non-salary benefits provided to its employees. Employers normally require employees to cover the FBT they pay so that the employer is not out-of-pocket because of the salary packaging arrangement chosen by the employee.
Note
FBT rates change from year to year. Please check the Australian Tax Office for the most recent rate.
On 1 January 2017, Services Australia (then known as the Department of Human Services) introduced its current treatment of reportable fringe benefits. For most employees, 100% of reportable fringe benefits will be assessed when calculating eligibility for family assistance and youth income support payments. However, Services Australia will only consider 53% of the value of reportable fringe benefits from the following types of employers: public benevolent institutions (PBI), health promotion charities (HPC); and public and not-for-profit hospitals and public ambulance services.
For more information about Services Australia treatment of reportable fringe benefits visit Services Australia.
There are some general exceptions to the above. For example, no FBT is payable on certain work-related benefits that are used mainly in the employee's employment such as electronic devices, software or protective clothing. Some minor benefits under $300 are also exempt. For example, if an employer provides an employee with flowers on their birthday.
There are specific FBT concessions for:
- charitable institutions and rebatable employers, and
- health promotion charities and public benevolent institutions (PBI)
Caution
The FBT regime can be complex, and we recommend organisations seek advice about where they are required to pay FBT and where exemptions may apply.
Rebate for charitable institutions and rebatable employers
An FBT rebate (essentially a tax discount) is available to organisations that are:
- charities registered with the ACNC and which are recognised as charitable institutions by the ATO (Tax Concession Charities), and
- certain non-government not-for-profit community organisations (called 'rebatable employers')
Rebatable employers include:
- certain scientific or public educational institutions
- certain trade unions and employer associations
- not for profit tax exempt organisations established for musical or community service purposes
- not for profit tax exempt organisations established for the encouragement of science, animal racing, art, a game or sport, literature, or music
- not for profit tax exempt organisations established for the purpose of promoting the development of any of aviation or tourism, Australian information and communications technology resources, or Australia's agricultural, pastoral, horticultural, viticultural, aquacultural, fishing, manufacturing or industrial resources
These organisations are entitled to have their liability reduced by a rebate equal to 47% of the gross FBT payable, subject to a cap of $30,000 per employee for the 2018 FBT year and onwards.
The benefit of this rebate is that the organisation can offer employees non-salary benefits that are subject to the discounted FBT.
Exemption for health promotion charities, public benevolent institutions (PBIs) and hospital and ambulance services
Certain categories of organisations are exempt from FBT subject to a cap, provided that they are endorsed for FBT exemption by the ATO. This allows these organisations to provide salary packaging which is attractive to their employees.
This exemption is available to:
- public and not-for-profit hospitals and public ambulance services (the exemption is currently capped at $17,000 of fringe benefits per employee)
- registered public benevolent institutions and registered health promotion charities, provided they are endorsed to access the FBT exemption (a $30,000 cap per employee currently applies)
This means that, subject to the limit, there is no FBT payable on eligible benefits provided to employees by a FBT exempt endorsed organisation.
For information on endorsement as a Deductible Gift Recipient, go to our resources on DGR.
Reporting obligations for a health promotion charity or a PBI
If the cap for an individual employee is exceeded, and FBT is payable, the organisation will need to register for FBT with the ATO, lodge an FBT return for the relevant FBT year and pay FBT by the due date.
Fringe benefit details for all employees will need to be provided.
Reporting obligations in relation to the employees
If you provide an employee with fringe benefits with a total taxable value of more than $2,000 in an FBT year, you must report the grossed up value on their income statement or payment summary.
Employers are required to disclose whether they are exempt from FBT in the employee's payment summary.
This amount is not shown as income in the employee's tax return. Therefore, no income tax or Medicare levy is payable on it. However the amount is used in various income tests, (for example, HECS repayments, child support payments, means tested government benefits, Medicare levy surcharge, and super co-contribution).
The content on this webpage was last updated in June 2022 and is not legal advice. See full disclaimer and copyright notice.
