3 things employees need to know about FBT

From my last post we know that Fringe Benefits Tax (FBT) is paid by your employer but that doesn't mean you should ignore it completely as an employee. There are still a few things you should at least be aware of because it might cost you if you are not careful.

1. The ATO knows about your fringe benefits!
   If you receive more than $2,000 of reportable fringe benefits every year from your employer then it will show up on your annual payment summary. Although you do not pay income tax on this amount, it still counts towards calculations for things like the Medicare levy surcharge, repayments for Higher Education Loan Program (HELP or HECS for us oldies), working out various tax offsets, child support assessments and income testing for Centrelink benefits so keep all these in mind.
   
   
2. Religious and not-for-profit employers get FBT exemptions!
   Depending on who you work for like charities or hospitals or schools, you could receive up to $30,000 of your salary in exempt fringe benefits each year. This effectively means you don't pay income tax on up to $30,000 of your salary and your employer doesn't care because they don't have to pay FBT on it either.
   
   
3. Salary packaging can save you money!
   Not everyone gets the chance work in charities or save lives in hospitals or educate our future leaders in schools, but no matter where you work there are opportunities for you to salary package certain fringe benefits which your employer does not have to pay FBT on. This means your boss would be more than happy to negotiate a salary sacrifice arrangement with you because they always want to make you happy especially if it costs them nothing. And you get the benefit of paying less tax.
   

If you are thinking of bringing up salary sacrifice with your boss, or if you run a business and want to offer salary packages to your key staff, then contact me first to make sure that the arrangements are made in the most tax effective manner otherwise someone has to foot the 46.5% FBT tax bill. That someone will probably...