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In simple terms, what is the Fringe Benefit Tax? |
In simple terms, what is the Fringe Benefit Tax? Hi there, Fringe Benefits Tax (FBT) is a way of making sure people who take their salary in non-cash (e.g. car, computer) items, still pay some sort of tax on it. People on a $100,000 salary in cash used to pay tax on $100,000. While other people were earning a $100,000 salary by taking $60,000 in cash and $40,000 in cars, computers etc. The latter person used to only pay tax on the $60,000 salary, and get the rest $40,000 tax free. FBT was a way to level the playing field. Hope this helps. Sounds like a desperate tax to me. Check out NZ's website... http://www.ird.govt.nz/fbt/fbtfaq-faq.ht... Here is an excerpt from a website: A fringe benefit may be regarded as any form of employee remuneration other than salary and wages or other payments that are subject to income tax (eg. termination payments, superannuation). Fringe Benefits Tax (FBT) is generally payable where: * a 'benefit' is provided; * the benefit is provided in respect of the employment of the employee; * the benefit is provided by the employer (or an associate of an employer or a third party under an arrangement); and * the benefit is provided to an employee or an associate (family member) of the employee. See the site for more info. http://au.smallbusiness.yahoo.com/040202... a tax to cover benefits that an employee may get from there employer that is not paid in cash, and therefore not subject to normal PAYG tax. eg use of a company car. You are getting the benefit of the use of the car, so this is determined to have a dollar value, and FBT applied. This whole area becomes quite complex however, and some organisations have exemption from paying FBT eg Not For Profit Organisations. What is fringe benefit tax? rediff Business Desk | March 22, 2005 The imposition of fringe benefit tax that proposes to tax companies on perquisites provided to their employees by Finance Minister P Chidambaram in his recent Budget has sparked off a huge debate amongst corporate and tax circles. Fears have been aired that many an industry will be badly hit by the fringe benefit tax and act as a barrier to their growth and well being. So just what is fringe benefit tax? The taxation of perquisites -- or fringe benefits -- provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefit tax. Any benefits -- or perks -- that employees (current or past) get as a result of their employment are to be taxed, but in this case in the hands of the employer. This includes employee compensation other than the wages, tips, health insurance, life insurance and pension plans. Fringe benefits as outlined in section 115WB of the Finance Bill, mean any privilege, service, facility or amenity directly or indirectly provided by an employer to his employees (including former employees) by reason of their employment. They also include reimbursements, made by the employer either directly or indirectly to the employees for any purpose, contributions by the employer to an approved superannuation fund as well as any free or concessional tickets provided by the employer for private journeys undertaken by the employees or their family members. http://in.rediff.com/money/2005/mar/22sp... |
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