The true cost of work perks.

We get it. When it comes to work perks, it’s hard to say no — whether it’s a fun Christmas party, a weekend-ready company car, or a fully paid conference trip. But behind the scenes of these fringe benefits is a complex and often costly layer of tax law that can leave both employers and employees out of pocket. So, is FBT worth the hassle? 

 

What is a fringe benefit? 

A fringe benefit is essentially the non-cash part of your pay — something extra your employer provides in addition to your salary. Unlike a work-related expense that clearly benefits the business, such as tools or training, fringe benefits are more personal in nature.

 

The ATO recognises that employers like to keep staff happy, but it also sets strict limits. If the benefit is valued over $300, fringe benefits tax (FBT) may apply.

 

This $300 limit covers things like the Christmas party and a gift. But beyond that, there are no restrictions. Your employer could pay your mortgage, private health insurance, or even fund your European holiday. That’s where salary packaging comes in. 

 

Salary packaging: More bang for your buck? 

In theory, salary packaging can be a smart move. It allows certain expenses to be paid from your pre-tax salary, which reduces your taxable income.

 

For example, a $1,000 trip might only reduce your take-home pay by $610 if you’re on a 37% marginal tax rate plus the 2% Medicare levy — because the money comes out before tax is applied. 

 

Sounds great, right? Not always. 

 

The FBT sting. 

Many people don’t realise is that FBT is charged at 47% — which is very high. It’s equivalent to the top tax rate for high-income earners.

 

Because it’s so expensive, most regular employers won’t absorb the cost themselves. Instead, they’ll take it out of your total salary package — which means you'll either get fewer perks, or your base salary might be adjusted down to cover it.

 

So, while salary packaging can be a smart tax move in some cases, in many others, the benefit is cancelled out by the hefty FBT. This can mean that salary packaging ends up leaving employees worse off than if they’d just taken the cash. 

 

FBT-free options. 

They exist, but they’re limited.

 

Some items, such as work-related phones, laptops and tablets, may be exempt if they’re used primarily for business purposes. Tools of the trade, protective clothing, and even certain software can also be FBT-free.

 

There’s also the “otherwise deductible rule”, which allows you to salary-package items you could otherwise claim as a tax deduction — like income protection insurance or professional membership fees.

 

Vehicles are a grey area. Unless your employer is FBT-exempt or you’re driving an electric car (which has specific concessions), salary packaging a car often results in more cost than benefit—especially when you add record-keeping and compliance costs.

 

Buying the car outright and claiming any work-related costs yourself is often the more financially effective option, but it may not be as convenient. 

 

 

Our two cents on FBT. 

While fringe benefits and salary packaging can offer savings, they often come with hidden tax complications. If you're considering any kind of salary packaging arrangement—or if you're an employer looking to offer staff perks—speak to us first.

 

And, do it before the financial year ends. May and June are the key months to get your tax planning sorted!

 

Reach out to learn more and schedule a confidential consultation. 


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One of the most powerful decisions you can make with your superannuation is whether to run your own self-managed super fund (SMSF) and whether to invest in property through it. Most people know it's possible to use super to buy property. Far fewer know how to do it well. The following seven tips are designed to help you make the right decisions. 1. You Can Borrow Money to Purchase Property in Superannuation. Don't have enough in your SMSF to buy an investment property outright? Since 2008, superannuation held in a self-managed super fund can be used to borrow money for property purchase. This is done through a 'limited recourse loan' using a Bare Trust as the Custodian entity. You can't borrow the total value of the property—typically it's up to 80% for residential properties and 60% for commercial properties, with the required deposit held in the SMSF as security. The SMSF then makes the loan repayments, with rental income received by the fund and property expenses paid by the fund. 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Having accessible funds in the SMSF means you're not caught short if repairs are needed, the property sits vacant, or an unexpected expense arises. Because superannuation is central to most Australians' retirement security, the government has carefully regulated what can and can't be done with it. They don't want people gambling their retirement away on poor investments or incorrectly using their superannuation fund. 4. Use the Rental Income to Repay Your Loan You cannot live in the property you purchase through your SMSF until after retirement. Most people purchase an investment property and use the rental income generated to repay the loan—which makes excellent financial sense. The key is selecting a property that rents easily and delivers a strong rental return. Your purchasing criteria may look a little different to buying a home you'd live in yourself. For example, proximity to public transport, local amenities, and average rental rates in the area matter more than personal preference. 5. Get It Right and Enjoy Significant Tax Efficiencies One of the most compelling reasons to invest in property through superannuation is the tax efficiency on offer. These benefits can significantly improve the long-term return of a property investment compared to holding it in your own name. Key tax benefits include: No capital gains tax or tax no yearly investment earnings if under super caps. Salary sacrifice advantages if you're sacrificing salary payments into super, loan repayments are effectively tax deductible. Capped tax on investment income—the maximum rate of tax on income after expenses is 15%. Any capital gains on investments held for 12 months or more, is taxed at 10%. Standard investors outside super can pay up to 47%. 6. Follow the Same Due Diligence Rules as Any Property Purchase Buying through superannuation doesn't mean relaxing your standards. If anything, the rules governing SMSFs mean you need to be more rigorous, not less. Property is likely one of the most significant financial decisions of your life. Research, not emotion, should drive your choices. The same rules apply whether you're buying in or out of super: Visit and compare multiple properties Know the values of similar properties in the same area Get all property checks performed by the right professionals Shop around for the right loan structure and lender Don't abandon good investor habits just because the structure is different. 7. Always Get Quality Professional Advice Nothing comes without risk—but the right advice significantly mitigates it. The key is understanding what you're getting yourself into: making informed decisions based on accurate data; keeping a diversified superannuation portfolio that doesn't place all your eggs in one basket; and not underestimating how complex buying property in superannuation can be. Sound Simple? It’s all in the details. If the above tips have made it sound straightforward, know that the detail is where the complexity lives. Getting professional advice from the start helps ensure you make the best possible decisions for your future. When selected according to rigorous property-purchasing criteria, property can be an excellent way to grow your superannuation and increase your chances of building a retirement fund that supports the lifestyle you want. Ready to Explore Property in Your SMSF? Whether you'd like to discuss whether an SMSF is right for you or need help setting one up, reach out to Ascent Accountants . If you want assistance managing the property within your fund, contact the Ascent Property Co team .
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