What is a Fringe Benefit (FB)?
Fringe Benefits is a tax payable by you (as the employer/ small business owner) on benefits which you provide to your employees. Even though the benefit is received by your employees, it is you who bears the expense of the fringe benefits tax. This is different to employees’ salary and wages, where it is the employees who bears the cost of the tax through PAYG Withholding Tax.
Fringe Benefits do not include salary and wages or bonuses. They are generally non-cash benefits and can include the following:
- Employee is provided a work car for use. However, the employee also uses this car for personal purposes (the personal component is subject to fringe benefits tax)
- Holidays and entertainment
- Payment of a non-work related expense incurred by an employee – e.g. school fees
- and many others…