AUTHORS

As a manager in our business advisory division, Steffie Wallner works closely with individuals and small businesses, providing them with solutions to simplify complex taxation and business problems.
Steffie Wallner
Manager
Business Advisory
Busselton
Chanel Mallon is an Accountant in the Busselton office of RSM Australia.
Chanel Mallon
Accountant
Business Advisory
Busselton

Fringe Benefits Tax (FBT) is a separate tax that employers pay on specific non-cash benefits provided to employees, in addition to their salary or wages.

In the tourism and hospitality industry, these benefits often include accommodation, meals, entertainment, and travel – all common ways businesses reward or support staff. 

Such benefits are widespread across hotels, restaurants, travel agencies, tour operators and accommodation providers, understanding and managing FBT correctly is vital for compliance and cost control.

What is Fringe Benefits Tax (FBT)?

FBT is distinct from income tax and is calculated on the taxable value of the benefits provided to employees.

In simple terms, it’s the cost to the employer of providing the benefit.

Common examples of fringe benefits include:

  • Company cars used for personal travel
  • Free or discounted staff accommodation
  • Entertainment expenses, such as meals and event tickets
  • Payments for personal expenses made on behalf of an employee

Common fringe benefits in Tourism and Hospitality

Due to the nature of the industry, employers in tourism and hospitality frequently provide non-cash benefits to attract and retain staff. Some of the most common include:

  1. Accommodation: Free or discounted rooms or staff housing, especially in remote or seasonal locations
  2. Meals and Entertainment: Complimentary or reduced-cost meals, drinks, or event tickets
  3. Travel: Covering transport costs such as flights, car hire, or accommodation for staff travel
  4. Discounts: Offering staff discounts on tours, experiences, or services provided by the business

These benefits can boost employee satisfaction and retention but may also trigger FBT obligations if not correctly recorded and reported.

Calculating and reporting FBT

FBT is calculated on the taxable value of each benefit provided. The Australian Taxation Office (ATO) provides specific valuation methods for different benefit types.

For instance, a car fringe benefit can be calculated using either the statutory formula method or the operating cost method.

Employers must lodge an FBT return each year and pay any outstanding FBT liabilities. The FBT year runs from 1 April to 31 March, with returns due by 21 May annually.

Accurate valuation is especially important for seasonal and casual tourism workers, where benefit usage can vary throughout the year.

Reducing FBT liability

Tourism and hospitality businesses can manage and reduce their FBT liability through several strategies:

  1. Employee Contributions: Allow employees to contribute towards the cost of a benefit, reducing its taxable value
  2. Exempt and Minor Benefits: Some items – such as work-related devices (laptops, mobile phones) or minor benefits under $300 provided infrequently – are FBT-exempt
  3. Salary Packaging: Structure employee compensation to include non-cash benefits that attract lower or no FBT

These approaches not only help minimise tax exposure but also create fairer and more transparent staff benefits programs.

Record keeping and compliance

Maintaining accurate and comprehensive records is critical for FBT compliance. Employers should keep:

  • Receipts and invoices for all benefits provided
  • Vehicle logbooks
  • Employee declarations

In the tourism and hospitality sector, where staff turnover and seasonal employment are common, staying organised with FBT documentation helps reduce compliance risks and potential penalties.

Conclusion

Effective management of Fringe Benefits Tax is essential for tourism and hospitality organisations. By understanding which benefits attract FBT, accurately calculating and reporting them, and implementing smart strategies to reduce liabilities, businesses can remain compliant with ATO requirements while focusing on delivering memorable guest experiences.

For tourism operators, accommodation providers, and hospitality employers, proactive FBT management isn’t just about compliance – it’s about sustaining a financially healthy and well-supported workforce. If you would like more information about how FBT can effect your Tourism business please reach out to your local RSM adviser today. 

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