How Does FBT Affect My Tax Return?
Fringe Benefits Tax (FBT) impacts your tax return by influencing certain aspects of your financial profile rather than directly altering your taxable income. Here’s how it plays a role in your tax return in Australia.
No Direct Tax for Employees
As an employee, you’re not directly responsible for paying FBT—your employer handles this tax on any non-cash benefits you receive. These benefits can include items like a company car, health insurance, or certain loan arrangements. Although you don’t pay FBT, it still has indirect effects on your tax return and other financial considerations.
Reportable Fringe Benefits and Your Income Statement
If the total value of fringe benefits provided to you exceeds $2,000 in a financial year, your employer must report this amount on your income statement as “reportable fringe benefits.” Although this figure doesn’t contribute to your taxable income, it’s used to assess eligibility for certain tax offsets, levies, and government entitlements.
Impact on Other Financial Assessments
Reportable fringe benefits can affect calculations for various financial obligations and entitlements. These include:
Medicare Levy Surcharge: Higher reportable fringe benefits may push your income over the threshold, potentially requiring you to pay the Medicare Levy Surcharge.
HECS-HELP Repayments: Reportable fringe benefits are considered part of your income when calculating repayment amounts for HECS-HELP debt.
Centrelink Entitlements: For income-tested Centrelink benefits, reportable fringe benefits might reduce your entitlement amount.
Tax Offsets: Eligibility for certain tax offsets, such as the Senior Australians Tax Offset, can be influenced by reportable fringe benefits.
These assessments can have a noticeable effect on your overall tax position, even if your taxable income remains unaffected.
What This Means for Employers
Employers manage FBT through a separate tax return filed annually. They calculate their FBT liability based on the value of the fringe benefits provided within the FBT year (April 1 to March 31). While they incur additional tax obligations, they can claim deductions for costs associated with these benefits, as well as the FBT itself, helping to balance the financial impact.
Want to understand how FBT might affect your tax return? Consult a tax professional to ensure you’re optimising your tax strategy around FBT considerations.