What is Fringe Benefits Tax?

A fringe benefit is generally a non-cash benefit received by an employee (or an associate of the employee) as a result of their employment. This may include the use or ownership of something, enjoyment of a privilege or use of a service.

While fringe benefits do not form part of your assessable income, the ‘grossed-up’ value of fringe benefits may be included in a broader definition of ‘income’ when determining your eligibility for certain government benefits and concessions or liability for levies.

Reportable Fringe Benefits

A reportable fringe benefit is simply the ‘grossed-up’ taxable value of the fringe benefit provided and is the amount shown on the employee’s payment summary. ‘Grossing-up’ involves applying a specific formula to the value of the fringe benefit received.

Your employer is required to include such reportable fringe benefits amounts on your payment summary. Examples where reportable fringe benefits are added to your other income are for the purpose of determining:

- Medicare levy surcharge

- Child support payments

- Higher Education Loan Program (HELP) repayments, or

- Government co-contribution.

Adjusted fringe benefits are effectively reportable fringe benefits ‘grossed-down’ for the effect of the fringe benefits tax. Examples where adjusted fringe benefits are added to your other income are for the purpose of determining:

- Family Tax Benefit

- Child Care Benefit, or

- The Parental Income Test for Youth Allowance


Important notes

Article originally appeared at Any advice given is of a general nature only and does not take into consideration your personal circumstances. Please consider the appropriateness of the advice before acting.

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