Fringe Benefit Tax: A Reply to Johansson

Abstract

The issue of Fringe Benefit Taxation (FBT) has had significant impact for Human Resource practitioners concerned of with designing remuneration policies sufficient to attract, retain and motivate employees. A recent article on this subject, published in this journal (Johansson 1986), was instructive both for its technical content and in the sense that the Fringe Benefits Tax legislation was viewed as a whole new remuneration issue facing personnel managers. Unfortunately, however, the technical content of the article and FBT as a remuneration issue was not presented in its proper context; that is, the creation of the basis of a totally new remuneration structure arising out of the relationship between the FBT Act and the Income Tax Act. Apart from passing references to the continued cost effectiveness of providing company cars as remuneration and a mention of the increased flexibility enabled by the new legislation, the author has ignored the effect of the legal principles which underpin the way in which the tax changes impact the structure of employee remuneration in Australia.