Fringe benefits are non-cash benefits provided by employers as a reward to employees or their associates. These benefits include providing interest-free loans, low-cost accommodation, motor vehicles for employees' private use, payment of golf-club membership fees, etc. It will also generally cover any "arrangement" which also involves a third party.

If you are an employer, you are liable to pay FBT if you provide employees with a fringe benefit. As with most areas involving tax, the operation of the FBT system contains several complexities and exceptions. However, you will most likely be required to pay FBT at a rate of 45%, plus the Medicare levy, on the value of the benefit provided. Because you pay the tax, the value of the benefit is not taxable in the hands of your employees, although the cost is often treated as part of the employee's remuneration package.

You can obtain more information on FBT through the ATO website or from the ATO's Business Infoline on 13 28 66.

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