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For any non-cash benefits provided to employees, employers are subject to a Commonwealth tax known as fringe benefits tax (FBT). This is not a tax for which employees are liable.

The FBT year runs from 1 April to 31 March, and FBT rates and thresholds are available at the ATO.

Employers are liable for FBT at a rate of 47%, equal to the sum of Australia's top individual marginal tax rate plus the Medicare Levy (see 1.1 for current Medicare rates). The rate is applied to the 'taxable value' of the fringe benefit provided. The costs of providing the fringe benefit and the FBT are tax deductible to the employer.

The ATO has published a guide for employers that is accessible on the ATO's website.

The FBT regime is governed by the Fringe Benefits Tax Assessment Act 1986.

Exempt fringe benefits

Some fringe benefits, such as work-related portable electronic devices, are specifically exempt and have a taxable value of zero for FBT purposes. Fringe benefits also have a taxable value of zero where the employee would have been