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This chapter examines FBT, which is a separate Commonwealth tax payable by employers on fringe benefits provided to their employees. Fringe benefits cover most kinds of non-salary benefits provided in respect of employment (eg the use of a car, free housing and discounted goods or services). Australia is one of only two OECD countries (the other is New Zealand) that tax employers on the provision of fringe benefits. Most other countries simply assess employees on the value of the fringe benefits that they receive under their general income tax systems. Before the introduction of FBT in 1986, Australia also used to assess employees on fringe benefits under former s 26(e) ITAA36. FBT was introduced because employees had a poor record of complying with s 26(e) and because the provision suffered from various valuation and other technical problems. This meant that, in practice, the income tax system did not adequately capture all types of fringe benefits. FBT was also introduced because it is more efficient to administer since there are far fewer taxpayers to deal with.
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