FBT - Exemptions

There is an exemption for the first $1,000 (GST inclusive) of in-house benefits provided each FBT year to an employee/associate.  This exemption applies to goods and services which the employer sells or supplies to a third party in the ordinary course of its business.

Where a business sells goods to the public, the taxable value is calculated by taking 75% of the lowest price at which the goods are normally sold, less the $1,000 exemption.

For example: a clothing retailer can provide free clothing to an employee to the value of $1,333 without paying any FBT.  ($1,333 X 75% − $1,000 = zero taxable value).

NB! From 22 October 2012 the $1,000 exemption was removed for in-house fringe benefits provided under a salary sacrifice arrangement after that date and from1 April 2014 for in-house fringe benefits provided under salary packaging arrangements made before that time. The taxable value is 100% of the market value of the goods (not 75%).

> the in-house fringe benefits tax-free threshold increased from $500 to $1,000 (see proposal above to remove this exemption from 22 October 2012).

> the minor benefits exemption threshold increased from $100 to $300

> the reporting exclusion threshold increased from $1,000 to $2,000
 

Expense payment, property or residual benefits arising in respect of the following items are exempt benefits:

> briefcase

> calculator

> computer - notebook, laptop or a similar portable computer (2)

> computer software for use in the employee's employment

> electronic diary or similar item, including a personal digital assistant (PDA)

> mobile phone or a car phone (1)

> portable printers designed specifically for use with a notebook computer, a laptop computer or a similar portable computer (from 1 April 2006).

> protective clothing that is required for the employment of the employee 

> tools of trade 

Note (1) - A benefit arising in relation to a mobile phone or a car phone attracts the exemption only if the phone is primarily for use in the employee's employment.

Note (2) - The exemption in relation to portable computers is limited to the purchase or reimbursement of one computer per employee per year.

Note (3) – Depreciation deductions claimed by an employee in respect of FBT exempt items are denied.  For items purchased before 13 May 2008 – depreciation was allowed for 2007/2008.