Fringe Benefits Tax
What is Fringe Benefits Tax?
Fringe benefits tax (FBT) is paid by the University of Tasmania (the University) on benefits that are provided in place of, or in addition to, the salary or wages of employees.
Who pays Fringe Benefits Tax?
FBT is payable by the University as an employer and is assessed on the value of the fringe benefits provided to employees or their associates. The benefit does not have to be provided directly by the University in order for FBT to apply. FBT may still apply if the benefit is provided by an associate of The University or by a third party under an arrangement with The University.
What is a fringe benefit?
Basically a fringe benefit is a benefit that is provided to an employee or an associate of the employee (such as a family member) in respect of the employee's employment. As such, benefits provided to spouses and children may be subject to FBT.
Benefits can be provided by an employer, an associate of the employer or by a third party under an arrangement with the employer.
For fringe benefits tax purposes an employee can be a current, future or former employee.
The term benefit is broadly defined and includes any right (including any property right), privilege, service or facility.
So a benefit could be:
· the use of something, e.g. the use of a car, a house or equipment, including mobile phones;
· ownership of something, e.g. provision of items of clothing/uniform;
· enjoyment of a privilege or facility, e.g. a loan/advance without interest; or
· provision of a service, e.g. travel for spouse.
Benefits to which FBT does not apply?
· Payments of salary or wages.
· Employer contributions to complying superannuation funds.
· Eligible termination payments
Types of fringe benefits
FBT law identifies various categories of fringe benefits and there are specific valuation rules for determining the amount of FBT payable for each category. Set out below is an overview of the main types of fringe benefits to which FBT may apply.
1. Car fringe benefits
A car fringe benefit generally arises when a car which is owned or leased by the University is either used privately by or made available for the private use of an employee. If the employer's car is garaged at an employee's house, then it is treated as having been made available for private use.
University Vehicle Fleet
In accordance with the University's Vehicle Policy, all fleet vehicles (including those on long term allocation to a budget centre) are provided exclusively for University business purposes and no private usage is allowed.
For FBT purposes, a logbook is required to be completed for all fleet vehicles on a continuing basis throughout the year to substantiate that there is no private usage. The logbook must be retained by the relevant budget centre for audit purposes. More information on logbook requirements is provided in the Vehicle Policy.
Vehicle provided under remuneration packaging arrangement
Vehicles provided to senior University staff in accordance with remuneration packaging arrangements are able to be used for private purposes and are governed by a separate policy. The provision of vehicles under these arrangements is subject to FBT.
2. Expense payment fringe benefits
If the University pays for, or reimburses, an expense incurred by an employee, an expense payment fringe benefit may arise. Some examples of expense payment fringe benefits are:
o Payment/reimbursement of course fees including HECS;
o Payment of travel costs for the spouse/partner of an employee;
o Payment of travel costs where a personal holiday is combined with a university business trip;
o Payment of costs for travel in excess of 5 nights where a travel diary has not been maintained;
o Payment of telephone costs for home phone lines.
3. Housing fringe benefits
A housing fringe benefit may arise if the University provides accommodation to an employee rent free or at a reduced rent if that accommodation is the employee's usual place of residence.
For example, if a University employee was allowed to live in the University's student accommodation facilities without having to pay rent, FBT may apply.
4. Property fringe benefits
A property fringe benefit may arise if the University provides an employee with property, either free or at a discount. Property includes:
o all goods, e.g. items of clothing/uniforms or a musical instrument;
o real property, e.g. land and/or buildings; and
o other property, e.g. shares.
5. Entertainment provided by an income tax-exempt organisation
The University is an income tax exempt organisation. As such, a tax-exempt body entertainment fringe benefit may arise when the University provides an employee with entertainment by way of food, drink or recreation. Accommodation or travel provided in connection with such entertainment is also deemed to be entertainment. Examples include:
o Social functions;
o Christmas functions;
o Meals when an employee is not travelling;
o Tickets for theatrical and sporting events
6. Living-away-from-home allowance fringe benefits
If the University pays an allowance to an employee to cover additional expenses incurred because the employee is temporarily required to live away from his or her usual place of residence in order to perform duties of employment, a living-away-from-home allowance fringe benefit may arise.
7. Loan fringe benefits
A loan fringe benefit may arise if the University gives a loan or advance to an employee interest free, or at an interest rate that is less than the statutory interest rate.
8. Debt waiver fringe benefits
If an employee owes a debt to the University, and the University releases the employee from the obligation to repay the debt, the unpaid amount may be a debt waiver fringe benefit.
9. Residual fringe benefits
A residual fringe benefit may arise when the University provides an employee with any right, privilege, service or facility, etc, which is not one of the specific types of fringe benefit already mentioned above. Some examples of residual fringe benefits are:
o use of University property, e.g. video camera or television;
o provision of a service, e.g. advice given by a solicitor about an employee's personal affairs; and
o private use of a motor vehicle which is not a "car" for FBT purposes, e.g. a delivery van.
How much is FBT?
The calculation of FBT will vary depending on whether GST is being claimed by the University for the particular transaction. To calculate the FBT applicable to a particular transaction, the following rules apply:
Type of Transaction |
FBT Calculation |
GST charged and to be claimed by University |
GST inclusive cost x 0.96 |
GST not charged |
Cost x 0.869 |
GST charged but not claimable by University |
GST inclusive cost x 0.869 |
More information on this can be found in the GST Fact Sheet: "Fringe Benefits Tax and GST" which is available on the Financial & Business Services website.
When is FBT payable?
FBT is generally charged to Budget Centres when a relevant transaction is processed through the FMIS, BCMS or HRMS. In addition, quarterly reviews are undertaken by Financial & Business Services in preparing the University's FBT return. Any FBT identified will be charged to the Budget Centre as soon as practicable after the completion of the FBT return (generally May/June).
Reportable fringe benefits
If the University provides fringe benefits to an employee with a total taxable value of more than $2 000 for an FBT year (1 April to 31 March), the grossed-up taxable value of the benefits must be recorded on the employee's payment summary for the corresponding income year (1 July to 30 June). This must also include any fringe benefits provided to associates of the employee, such as a spouse or child.
Even though a reportable fringe benefits amount is included in a payment summary and is shown in a tax return, it is not included in assessable or taxable income. It is, however, included in a number of income tests for:
- Medicare levy surcharge
- Deduction for personal super contributions
- Super co-contribution
- Tax offset for eligible spouse super contributions
- Mature age worker tax offset
- Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) repayments
- Child support obligations
- Entitlement to certain income-tested government benefits
Related University Policies
Fringe Benefits Tax Policy
Vehicle Policy
Travel Policy
Combined Business & Private Travel Policy
Uniform/Clothing Policy
Who can help me with queries?
For more information on FBT please contact Financial & Business Services as follows:
Carol Connors Manager - Business Services ext 3655
