Tax Tips    FBT Exemptions and Reductions

FBT Exemptions and Reductions

Fringe benefits are extra benefits supplementing an employee’s ‘money wage’ or salary. The most common fringe benefit in Australia is company cars.

When these benefits are provided to employees they are tax deductible to the employer, not assessable to the employee, and not subject to fringe benefits tax (FBT). This is a win for both the employer and employee.

Benefits the FBT exemption and reductions applies to include:

  • Long service awards – where the benefit provided to an employee is limited to $1,000 plus $100 for each year of service that exceeds 15 years.
  • Safety awards – limited to $200 per employee per FBT year.
  • In-house benefits reduction – limited to $1,000 per employee per year.
  • Superannuation contributions.
  • Work related items, protective clothing, tools, mobile phones, and laptops.
  • Remote area housing.
  • Employee relocation costs.
  • Living away from home allowances (partly exempt).

In-house benefits reduction is where the employer provides employees with a discount on the sale price of goods they sell or services they provide to the general public. If the discount provided to an employee for the year is less than $1,000 the employer pays no FBT. The discount or benefit is tax free to the employee.