Fringe Benefits Tax: The Tax That Should Be Cancelled (But Unfortunately Isn't)
- All In Advisory
- Feb 2
- 5 min read
So you find yourself here because you’re wondering all about this FBT stuff you’ve heard about but never quite understood. Let me tell you, this is hands down our most hated tax. And if I’m going to get political… and yes, I will… they need to get rid of it. Repeal it. Dump it. Set it on fire. Put it in the bin, light the bin on fire, and throw the ashes into the sea.
But until that glorious day comes, here’s what it is, what counts, and what obligations you have as an employer (yes, even if you were just trying to be nice).
🧐 What is FBT (Fringe Benefits Tax)?
FBT is the ATO’s way of saying: “Oh, you gave your staff something nice that wasn’t wages? We’ll take a slice of that, thanks.”
It’s a tax paid by employers on non-cash benefits provided to employees (or their families). These "fringe benefits" can be anything from a work car to gym memberships, sports tickets, or even fancy coffee setups. If you’re thinking, “Wait, I thought I was just being generous?”, congrats, you’re now in FBT territory.
🎯 What Kind of Stuff Triggers FBT?
Here come the usual suspects. You might recognise some of these offenders:
🚗 Company cars used for personal travel
💪 Gym memberships (even if it’s for morale, the ATO doesn’t care about your team spirit)
🎟️ AFL or concert tickets, or any tickets really (If you’re shouting box seats, the ATO wants a front-row seat to your FBT return)
✈️ Travel and accommodation for spouses/plus-ones or non-work related
🖥️ Work devices used personally
The ATO sees perks. You see goodwill. We see… compliance paperwork.
💸 The Murky FBT water
Entertainment, Lunches & Coffees: The (Taxable) Fine Print
When it comes to entertaining clients or your crew, the ATO loves to keep things… confusing. Whether it’s coffee, lunch, or a celebratory champagne, the deductibility (and FBT risk) all comes down to where, why, and who is involved.
Here is a rough guide:
Entertainment provided to clients (non-employees) = not subject to FBT, but also not deductible.
Entertainment provided to employees = usually subject to FBT, and not deductible (unless exempt via minor & infrequent rule).
Food and drink that’s not entertainment (like tea & bikkies in the office) = deductible, no FBT.
On your premises and for business, you're probably in the clear.
If it’s out and about, and there’s fun, food, or feelings involved, strap in for some FBT or non-deductibility.
The confusion comes from who’s getting the benefit, what the benefit is, where it was provided, and whether it’s part of their employment.
Need further deets? Don't worry, we've got your numbers AND your back! Here's your go-to cheat sheet to figure out what’s deductible, what triggers FBT, and what’s just a kind-but-tax-useless gesture:
☕🍽 The All-In Cheat Sheet: Meals, Coffees & Entertainment
Scenario | Deductible? | FBT Applies? | Notes |
Coffee purchased at a café for a client meeting | ❌ No | ❌ No | Entertainment, but for a client = not deductible, no FBT. |
Coffee served at your office during a client meeting | ✅ Yes | ❌ No | Business expense on-site = deductible and no FBT. |
Coffee machine and supplies for the office kitchen | ✅ Yes | ❌ No | Everyday staff amenity = deductible, no FBT. |
Coffee purchased for personal use (e.g. commuting or WFH) | ❌ No | ❌ No | Personal = not claimable. |
Lunch out with a client (e.g. café or restaurant) | ❌ No | ❌ No | Client entertainment = not deductible, no FBT. |
Lunch provided in-house during a work meeting (e.g. sandwiches in boardroom) | ✅ Yes | ❌ No | In-house for business = deductible, no FBT. |
Staff lunch at a restaurant or café (celebration, reward, etc.) | ❌ No | ✅ Yes | Employee entertainment = FBT applies unless minor & infrequent. |
Friday team coffee run (weekly ritual) | ❌ No | ✅ Yes (likely) | Regular employee benefit = FBT likely. |
One-off coffee shout for the team (e.g. end-of-project treat) | ❌ No | ❌ Possibly Not | Might be exempt under minor & infrequent rule. |
Alcohol or meals at a staff party or offsite event | ❌ No | ✅ Yes | Classic employee entertainment = FBT applies unless minor & infrequent exemption. |
Tea, coffee, biscuits available in the office for staff and clients | ✅ Yes | ❌ No | Non-entertainment refreshments = deductible, no FBT. |
☕ In Summary:
On-premises = good
Off-premises = usually entertainment (AKA no deduction)
Employees = FBT trap
Clients = no FBT, but still often non-deductible
Minor & Infrequent = your magical tax unicorn… if you qualify
🤏 Minor & Infrequent Exemption – AKA Your Get-Out-of-FBT-Free Card
The taxman-ian devil (AKA the ATO) does allow some breathing room with what’s called the Minor & Infrequent Benefits exemption.
Here’s the cheat sheet:
The benefit must be under $300 (incl. GST)
It must be infrequent (so... not every Friday, Steve.)
It must not be part of a salary packaging deal
📅 FBT Year vs Normal Tax Year – Because Why Not Be Extra?
The FBT year runs from 1 April to 31 March. Yes, while you’re deep in chocolate eggs and pretending not to check emails over Easter, FBT deadlines creep up like a tax-themed horror movie.
🧠 So... How’s FBT Actually Calculated?
Glad you asked! Here's where your brain starts to sizzle:
Work out the taxable value of the benefit
Gross it up (because the ATO wants to tax it like it was paid as pre-tax salary)
Type 1: If you’re entitled to a GST credit → gross-up rate = 2.0802
Type 2: No GST credit → gross-up rate = 1.8868
Multiply by 47% FBT rate
Example: A $1,000 gym membership (no GST credit) → grossed-up to $1,886.80
FBT payable = $887.80 😬
Moral of the story: That “free” perk might be costing you more than you think.
🧾 FAQs – Or, Questions We Get Every Year Without Fail
“Can I claim my gym membership?”
If it’s for your employee’s personal use, yes, it’s a fringe benefit. And yes, it’s taxable.
“Can I claim AFL/sports/concert tickets?”
Only if you want the ATO showing up with a whistle and a penalty. These are fringe benefits, and unless they’re under $300 AND infrequent, they’ll cost you.
“Can I write off the Friday office bar tab?”
Minor & infrequent if <$300, baby! Once in a while is probably fine. Every week? You’re running a pub, not a business.
🔥 Final Thoughts (and Fire-Starters)
We’ll say it again: We hate this tax. It’s clunky. It’s confusing. And it turns kind, generous employers into accidental tax evaders. But until it gets repealed, replaced, or launched into space, we’re stuck with it. So let’s keep it compliant, keep it smart, and, when possible, keep it funny.
Need help sorting your FBT obligations? Got a weird benefit you’re unsure about? Want to expense your coffee but don’t want a tax audit with your caffeine hit? Hit us up!
Disclaimer: The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice
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