The rationale behind FBT is that it helps restore equity and fairness to those employees who do not receive such benefits. FBT is paid by the employer at a rate of 46.5% which represents the highest marginal income tax rate (45%) plus the Medicare Levy (1.5%). Many employers will effectively recover the tax from employees by reducing gross salary/wages by an equivalent amount. Thus employees must 'salary sacrifice' to receive the benefits.
Some benefits are exempt from FBT, including:
Special concessional rules apply to employer-provided motor vehicles. Lower FBT rates apply if the vehicle is driven more under the statutory formula method.
The ATO has many useful guides to FBT in Australia.
The list of eligible work-related items currently includes:
(taken from "TaxTalk: Electronic Bulletin of Australian Tax Developments" - Federal Budget special edition: 14 May 2008)