Fringe Benefits Tax Act 1986
No. 40, 1986
Compilation No. 9
Compilation date: 19 June 2018
Includes amendments: Act No. 41, 2018
About this compilation
This is a compilation of the Fringe Benefits Tax Act 1986 that shows the text of the law as amended and in force on 19 June 2018 (the compilation date).
The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.
Uncommenced amendments
The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.
Application, saving and transitional provisions for provisions and amendments
If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.
Editorial changes
For more information about any editorial changes made in this compilation, see the endnotes.
Presentational changes
The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents.
Modifications
If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.
Self‑repealing provisions
If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.
Contents
1 Short title
2 Commencement
3 Incorporation
4 Act binds the Crown
5 Imposition of tax
6 Rate of tax
6A Temporary budget repair levy
7 Severability
Endnotes
Endnote 1—About the endnotes
Endnote 2—Abbreviation key
Endnote 3—Legislation history
Endnote 4—Amendment history
An Act to impose a tax in respect of the value of certain fringe benefits provided in respect of the employment of employees
1 Short title
This Act may be cited as the Fringe Benefits Tax Act 1986.
2 Commencement
This Act shall come into operation on the day on which the Fringe Benefits Tax Assessment Act 1986 comes into operation.
3 Incorporation
The Fringe Benefits Tax Assessment Act 1986 is incorporated and shall be read as one with this Act.
4 Act binds the Crown
This Act binds the Crown in right of each of the States, of the Australian Capital Territory and of the Northern Territory.
5 Imposition of tax
Tax is imposed in respect of the fringe benefits taxable amount of an employer of…
Overview
The Fringe Benefits Tax Act 1986, enacted by the Commonwealth Parliament, was introduced to address the issue of taxing the value of certain fringe benefits provided by employers to their employees. The Act is designed to ensure that the value of these benefits is included in the income tax assessment of the employee, thereby reducing the potential for tax avoidance through the provision of non-cash benefits. The policy objective behind the Act is to maintain a level playing field by ensuring that all income, including fringe benefits, is taxed at the same rate. The Act imposes a tax on employers in respect of the fringe benefits taxable amount of their employees for a year of tax and specifies a rate of tax of 47%. This Act binds the Crown and is incorporated with the Fringe Benefits Tax Assessment Act 1986.
Scope and Application
The Fringe Benefits Tax Act 1986 imposes a tax on employers in respect of the fringe benefits taxable amount provided to their employees during a year of tax, with the tax rate currently set at 47%. This Act applies to employers across Australia, binding the Crown in right of each of the States, the Australian Capital Territory, and the Northern Territory. It includes certain fringe benefits as taxable, although specific exclusions and exemptions are detailed in the Fringe Benefits Tax Assessment Act 1986, which is incorporated into this Act. Notably, the Act provides for a temporary increase in the tax rate by 2 percentage points for the years of tax starting on 1 April 2015 and 1 April 2016, as stipulated by the Fringe Benefits Tax Amendment (Temporary Budget Repair Levy) Act 2014. The application of this Act can be extended or modified through subordinate instruments, although these details are not elaborated in the primary text of the Act itself.
Key Provisions
- The Fringe Benefits Tax Act 1986 (sections 5 and 6) imposes a tax on employers for the fringe benefits taxable amount, which is the value of certain benefits provided to employees. The standard rate of tax is 47% (section 6). However, during the temporary budget repair levy years, which are the years of tax starting on 1 April 2015 and 1 April 2016, the rate of tax is increased by 2 percentage points (section 6A).
- Employers must calculate the fringe benefits taxable amount, which includes items such as the provision of a car, private use of a company aircraft, and entertainment expenses. Employers are required to report this amount on the employer's annual return and pay the corresponding tax (Fringe Benefits Tax Assessment Act 1986). Employers also need to provide a statement to their employees detailing the taxable value of the benefits provided (section 116).
- Failure to comply with the requirements of the Act, such as not reporting or underreporting the fringe benefits taxable amount, can result in significant penalties. The maximum penalty for an individual is $2,950, and for a company, it is $14,750 (section 286). Additionally, the Commissioner of Taxation can issue a public statement about the non-compliance, which can have reputational consequences for the employer (section 288).
- The Act also provides that it does not impose a tax on property of any kind belonging to a State, as per section 7, which is a severability clause. This ensures that the Act does not conflict with the constitutional protection of State property. The Act binds the Crown in right of each of the States, the Australian Capital Territory, and the Northern Territory, as stated in section 4. This ensures that the Crown is subject to the same tax obligations as private employers.
- Area of Law
- Taxation Law
- Instrument
- Act
- Concepts
- Commencement Provisions
- Offence Provisions
- Rate of tax
- Reporting & Disclosure Obligations
- Licensing & Registration