A fringe benefit is a system often used to pay staff, however not in the typical form of salary. The fringe benefits tax (FBT) legislation states that employers are able to reward their employees (future or present) by covering their expenses on particular products and services.
Some expenses and services that can be incorporated in an employee’s fringe benefits include (but are not limited to):
- A work car for private purposes
- Entitlement to a cheaper loan
- Payment of the employee’s gym membership
- Free tickets to events
- Provides other benefits under a salary sacrifice agreement
Fringe benefits are provided in respect of employment, so staff can benefit solely because they are an employee. If an employee is rewarded by one of the examples of a fringe benefit (a car, loan, gym membership, etc.) then this would be a prime example of the agreement. However if an employee received a gift that was given regardless of employment circumstances, this would not be a case of fringe benefits.
