How does fringe benefits tax work?
This is a tricky question – but we’ll try to keep it simple. With a standard remuneration package, income tax is deducted from your gross salary, leaving the rest for you to spend or save. Fringe benefits tax is calculated by first determining the net (or taxable) amount of benefits received, then working out the FBT payable on this value. The valuation of any benefit depends on: 1. the type of benefit; 2. how the benefit is provided; and 3. the fringe benefit tax status of the employer. It’s not just a matter of what is provided, but how the benefit is provided that determines the tax implications.
