If you provide free gifts and prizes, subsidised or discounted goods and services, fringe benefit tax is not payable if general employee and maximum employer exemption requirements are met.
You can provide up to $300 of free gifts and prizes, subsidised or discounted goods and services per employee per quarter without having to pay FBT. As soon as this limit is exceeded, the full value of the benefit is subject to fringe benefit tax (FBT). The exemption is not deducted first.
The maximum exemption you can claim is $22,500 per year. If the value of the benefits you provide exceeds this, you must pay FBT on the full value of the benefits for the year. This needs to be paid in the current quarter.
Common items that are exempt from FBT include:
- distinctive work clothing that identifies your company
- car parks you lease or are on your premises
- frequent flyer and membership reward schemes unless you have an arrangement with the scheme’s provider that benefits employees.
Annual and income year returns
Employers who file annual or income year returns have a yearly exemption of $1,200 for each employee, with the maximum employer exemption for all employees of $22,500 per year. If the period covered by the return is less than a normal income year, an adjustment per employee is needed.