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Fringe Benefits Tax (FBT) is paid on particular benefits employers provide to their employees or their employees' associates instead of salary or wages. Benefits can be provided by an employer, an associate of an employer, or a third party by arrangement with an employer. An employee can be a former, current, or future employee. 

FBT is separate from income tax and based on the taxable value of the various fringe benefits provided. The rate corresponds to the top marginal income tax rate for individuals, including the Medicare Levy (47% for the FBT year ending 31 March 2018). A complicated gross-up factor is applied in calculating the tax - the general principle is that the FBT payable should equal the income tax otherwise payable by an employee on the top marginal tax rate, on the cash salary needed to purchase the benefit (including GST) from after-tax income.

Reporting, lodging and paying FBT

The FBT year runs from 1 April - 31 March. Annual FBT returns must be lodged and tax paid by 21 May each year. Returns lodged through tax agents may qualify for extended due dates. Annual FBT liabilities of $3,000 or more are paid by quarterly instalments as part of the employer's business activity statement.

If the taxable value of certain fringe benefits provided to an employee exceeds $2,000 in an FBT year, the 'grossed-up' taxable value must be reported on the employee's payment summary for the corresponding income tax year. The following categories of fringe benefits apply, with specific valuation methods applicable to each category:

• Board - meals provided to an employee and family members, where the employer provides accommodation and at least two meals a day
• Car - a car made available for the private use of an employee or associate (car benefits can be valued using either the statutory formula or operating cost methods)
• Car parking - a car parking space provided for use by an employee or associate, on either the employer's premises or in a commercial car parking station
• Debt waiver - releasing an employee or associate from an obligation to repay a debt
• Income tax exempt body entertainment - FBT is payable by income tax exempt employers on entertainment provided to an employee or associate by way of food, drink or recreation
• Expense payment - paying or reimbursing a private expense incurred by an employee or associate
• Housing - accommodation provided that is an employee's or associate's usual place of residence
• Living-away-from-home allowance - a cash allowance paid to compensate an employee for increased costs, because the employee's duties require them to live away from their usual place of residence
• Loan - a loan provided to an employee or associate either interest-free or at a discounted interest rate
• Meal entertainment - entertainment provided by taxable employers by way of meals to an employee or associate
• Property - goods provided to employees either free or at a discounted price
• Residual - any fringe benefit (as defined) that does not fall into one of the specific categories

MORE: See the ATO web site for more on FBT categories.

Exemptions, concessions and special rules

A wide range of exemptions and reductions in taxable value apply.

Concessional valuation rules apply to 'in-house' fringe benefits The taxable value of certain fringe benefits can be reduced by employee contributions towards the cost of the benefit. Making such contributions can result in a lower overall tax liability, depending on the particular employee's tax situation and the valuation method that applies to each benefit received.

A first home saver account (FHSA) is a special purpose account designed to help people save for their first home. Once a year, the government will make a lump-sum contribution to the FHSA, based on the amount deposited into the account during that year.

The Australian Government has abolished the first home saver accounts (FHSA) scheme and these accounts are now treated like any ordinary account.

If you have an existing First Home Saver Account, don't miss out on any government contributions you may be eligible to claim - you have until 30 June 2017 to lodge your claim.

From 1 July 2015:

• You can use the balance of your account for any purpose
• Tax concessions cease
• Your account is included in any income and assets tests that apply to government benefits, including the family tax benefit
• You need to report interest from your account in your tax return (starting with interest earned in the 2015–16 financial year)

Tax obligations

Up to 30 June 2015, earnings on FHSAs were taxed at 15% and paid by the account provider. As an account holder, you didn't have to declare FHSA earnings in your tax return. From 1 July 2015, FHSA's will become an ordinary account. You will need to include your earnings in your tax return and pay tax at your marginal rate.

Outstanding government contributions

If you're entitled to a government contribution for a period up to 30 June 2014 that we haven't paid yet, we'll still pay it to you (you have until 30 June 2017 to make a claim).

If your account is closed, you should complete a Government contribution destination nomination form to tell us where to pay any outstanding amounts. If you don't complete this form, we'll mail you a cheque.

How and when the government contribution is paid

Before the government contribution can be paid two things must happen:

• You must lodge a tax return – or, if you don't need to lodge a tax return, lodge an FHSA notification of eligibility form.
• Your account provider must lodge an activity report with us by 31 October each year.

If you think you were entitled to a government contribution but haven't got one, check that you've met the requirements above before you contact us.

Once we have that information, we have 60 days to calculate and pay the 17% government contribution. This means that many people don't receive their government contributions until January in the following year.

Maximum annual government contributions

There's a limit on how much the government contributes – this is called the maximum annual government contribution.

The table below shows you how you needed to contribute in order to receive the maximum government contribution. You could deposit more but you won't receive more than the maximum annual government contribution.

Compliance

The ATO continues to have responsibility to ensure the integrity of the scheme while it was active.

See also:

• Budget 2014-15 - Budget Paper No.2 (PDF 3.0MB) - page 216

Excise duty is a tax on certain types of goods that are made in Australia including alcohol, tobacco, fuel and petroleum products.

Customs duty is imposed at an equal rate on imported alcohol, tobacco, fuel and petroleum products to ensure imported and local goods are treated consistently. These goods are referred to as Excise Equivalent Goods (EEGs).

Entities who manufacture or store excisable goods must hold an appropriate licence.

MORE: See the Excise section of the ATO web site for more information.