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 2015). A 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.
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