Lady Gaga’s Fame Ball Tour?
The nickname for a Canadian Poker Player?
An internet hacking technique or an Italian audio equipment manufacturer?
But for the purposes of this exercise, Fringe Benefits Tax is the tax applied to most, but not all, fringe benefits, or ‘perks’, including those provided through someone other than an employer.
A fringe benefit is a non-cash benefit provided to an employee or an associated person. Most benefits given to employees other than their salary or wages are fringe benefits.
Benefit categories include motor vehicles, low-interest loans, free, subsidised or discounted goods and services, employer contributions to funds, insurance and superannuation schemes and other benefits.
FBT is paid to the Inland Revenue Department by the employer and is calculated with reference to the value of the benefit provided to the employee or associate. Legislation governing the imposition of FBT is contained within section C of the Income Tax Act 2004. You’d be best advised to refer to your finance professional or broker to get the best advice on FBT treatment, deal with someone who is going to understand what you need.
As of 2006, there are three methods of rate calculation for FBT: flat rate (61% from 1st April 2009), multi-rate and short form multi-rate options. FBT filing may be quarterly, finance year, or annual tax returns.
There are of course some benefits that are not liable for fringe benefit tax, these include:
- cash remuneration (e.g., salary and wages, lump sums, bonuses, schedular payments (formerly withholding payments), interest and dividends)
- benefits given instead of a non-taxable cash allowance (for example, a meal given instead of a meal allowance)
- free board and lodging
- some forms of entertainment
- private use of employer owned or leased business tools where they are primarily for business purposes and the cost price of each tool does not exceed $5,000
- benefits arising from health and safety obligations and the minimising of hazards as identified in the Health and Safety in Employment Act i.e. health checks will be exempt regardless of whether the check is undertaken at the employers premises or not.
For the best tax-busting advice, consult the team at Bespoke Money to get an independent opinion and ways in which we can help you and your business.