Q: A client gives a subcontractor car benefits. The subcontractor works within the client's business but doesn't take on any risk for the work. The payment to the subcontractor is subject to payroll tax. Does the client need to pay FBT on the subcontractor’s car benefit?
A: The term "subcontractor" can mean different things. The important thing to consider is whether the individual fits the definition of "employee" for FBT purposes. This definition is similar to the one used for PAYG withholding tax. Risk isn't the only factor; we also need to see if the subcontractor is treated like an employee. So, whether FBT applies depends on whether the subcontractor is considered an employee and if they're given a car for personal use, not just for business purposes.
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