Fringe benefits tax (FBT)

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/
Last modified: 26 Aug 2020
QC 16941
A fringe benefit is a 'payment' to an employee, but in a different form to salary or
wages.

For fringe benefits tax (FBT) purposes, an employee includes a:

current, future or past employee

director of a company
beneficiary of a trust who works in the business.
Examples of fringe benefits include:

allowing an employee to use a work car for private purposes

giving an employee a discounted loan
paying an employee's gym membership
providing entertainment by way of free tickets to concerts
reimbursing an expense incurred by an employee, such as school fees
giving benefits under a salary sacrifice arrangement with an employee.
The following are not fringe benefits:

salary and wages

shares purchased under approved employee share acquisition schemes
employer contributions to complying super funds
employment termination payments (including for example, the gift or sale at a
discount of a company car to an employee on termination)
payment of amounts deemed to be dividends under Division 7A
benefits provided to volunteers and contractors
exempt benefits such as certain benefits provided by religious institutions to
their religious practitioners.

What is fringe benefits tax

FBT is paid by employers on certain benefits they provide to their employees or
their employees’ family or other associates. FBT applies even if the benefit is
provided by a third party under an arrangement with the employer.

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FBT is separate to income tax and is calculated on the taxable value of the fringe
benefit. The employer must self-assess their FBT liability for the FBT year (that is,
1 April to 31 March) and lodge an FBT return.

Employers can generally claim an income tax deduction for the cost of providing
fringe benefits and for the FBT they pay. Employers can also generally claim GST
credits for items provided as fringe benefits.

Specific concessions apply to some non-profit organisations (see Non-profit

organisations and FBT).

Watch:

Media: Paying workers - Fringe benefits tax: Tax basics for small business
http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfiyse9 (Duration: 04:31)

Register for FBT

Find out about:

Types of fringe benefits

Reducing your FBT liability
Salary sacrifice arrangements
Reportable fringe benefits – facts for employees
Calculating your FBT
Registering for FBT
Reporting, lodging and paying FBT
FBT exemptions and concessions
FBT Webinars
COVID-19 and Fringe benefits tax

Types of fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/
Last modified: 25 Jan 2021
QC 43852
How an employer calculates and reports the taxable value of fringe benefits
depends on the type of benefit provided – that is, how it's categorised for FBT
purposes.

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Find out about:

Car fringe benefits

Car leasing fringe benefits
Car parking fringe benefits
Entertainment-related fringe benefits
Expense payment fringe benefits
Debt waiver fringe benefits
Loan fringe benefits
Housing fringe benefits
Board fringe benefits
Living away from home allowance fringe benefits
Property fringe benefits
Residual fringe benefits
This video explains how you, as an employer, may be providing a fringe benefit if
you allow your employees or their associates to use your lifestyle assets for their
personal enjoyment.

Media: Lifestyle asset fringe benefits

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiuba937ad (Duration: 00:54)

Next steps:

Registering for FBT

Calculating your FBT
Reporting, lodging and paying FBT
See also:

FBT exemptions and concessions

Reducing your FBT liability
COVID-19 and Fringe benefits tax

Car fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Car-fringe-benefits/
Last modified: 25 Mar 2021
QC 43853
Employers may be providing a car fringe benefit if they make available a car they
own or lease to an employee for their private use.

For fringe benefits tax (FBT) purposes, a car is any of the following:

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 a sedan or station wagon
any other goods-carrying vehicle with a carrying capacity of less than one
tonne, such as a panel van or utility (including four-wheel drive vehicles)
any other passenger-carrying vehicle designed to carry fewer than nine
passengers.
If the vehicle is not a car, and the employee has private use of it, the employer may
be providing a residual fringe benefit rather than a car fringe benefit.

We have just released virtual introductory sessions to help employers work out
whether they are providing a car fringe benefit.

Employers can register by selecting a date and time that suits them.

We have also developed a video series to help employers calculate their car fringe
benefits and report them on their FBT return.

Next steps:

Register for an Employer: Introduction to car fringe benefits session

Watch the Calculating your car fringe benefits video series
Watch: Car fringe benefits

Media: Car fringe benefits

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiuba933nn (Duration: 0:50)

COVID-19 and car fringe benefits

There are some circumstances where an employer's FBT obligations relating to
cars may have changed as a result of COVID-19 (novel coronavirus). We have
published detailed information on our legal database.

Find out about:

COVID-19 and car fringe benefits

Private use
A car is taken to be available for the private use of an employee on any day they or
their associates use it, or are allowed to use it, for private purposes.

If a car is garaged at or near the employee's home, even if only for security reasons,
it is taken to be available for their private use regardless of whether or not they
have permission to use the car privately. Similarly, where the place of employment
and residence are the same, the car is taken to be available for the private use of
the employee.

Generally, travel to and from work is private use of a vehicle.

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Exempt car benefits
There are some circumstances where use of a car is exempt from FBT. For
example, an employee’s private use of a taxi, panel van or utility designed to carry
less than one tonne is exempt from FBT if its private use is limited to:

travel between home and work

incidental travel in the course of performing employment-related travel
non-work-related use that is minor, infrequent and irregular (such as
occasional use of the vehicle to remove domestic rubbish).
See also:

Fringe benefits tax – exempt motor vehicles

Other benefits relating to the use of a car

Other benefits relating to the use of a car, while not a car fringe benefit, may instead
be an expense payment or residual fringe benefit. For example, if an employer:

provides car parking for an employee, they may be providing car parking fringe
benefits
pays for, or reimburses, an employee’s expenditure on road tolls, they may be
providing an expense payment fringe benefit
allows an employee to use their employer's electronic toll tag, they may be
providing a residual fringe benefit
allows private use of a motor vehicle that is not a car, they may be providing a
residual fringe benefit.
See also:

FBT – a guide for employers: Chapter 7 – Car fringe benefits

Next step:

Working out the taxable value of a car fringe benefit

Authorised by the Australian Government, Canberra

Fringe benefits tax – exempt motor vehicles

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Car-fringe-benefits/Fringe-benefits-tax---exempt-motor-vehicles/
Last modified: 29 Mar 2019
QC 58429
An employee's private use of a taxi or a panel van, utility (ute) or other commercial
vehicle (that is, one not designed principally to carry passengers – see Table 1) is

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exempt from fringe benefits tax (FBT) if their private use is limited to:

travel between home and work

travel that is incidental to travel in the course of employment duties
non-work-related use that is minor, infrequent and irregular (such as
occasional use of the vehicle to remove domestic rubbish).
The exemption also applies to non-work-related use by an employee's associate
that is minor, infrequent and irregular.

The employer is not required to keep special records to be eligible for this
exemption. However, you must be able to demonstrate the use of the vehicle meets
the eligibility criteria at all times. This could be done by regularly comparing the
opening and closing odometer readings of the vehicle with the total distance you
expect the employee to travel between home and work during that particular period.

Alternatively, you may need more detailed records of the vehicle's usage during the
FBT year. This could be a valid log book, together with opening and closing
odometer readings.

See also:

Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of

cars: home to work travel – for more guidance on the private use of cars and
home to work travel
Practical Compliance Guideline PCG 2018/3 Exempt car benefits and exempt
residual benefits: compliance approach to determining private use of
vehicles – for more guidance on what is considered minor, infrequent usage
and what records need to be kept
On this page:

Eligible vehicles
FBT treatment when exemption requirements not met

Eligible vehicles
Table 1 below sets out the eligibility requirements for the FBT exemption for
different types of vehicles.

Table 1: Eligible vehicles – requirements for exemption

Vehicle type Requirements More information

Taxis qualify for the See subsection 8(2) and

work-related use 47(6) Fringe Benefits
exemption if they are Tax Assessment Act
owned or leased and 1986.
Taxi designed to carry a load
of less than one tonne

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 and fewer than nine
passengers.

Panel van – solid rigid- Panel vans qualify for See subsection 8(2) and
bodied, non-articulated the work-related use 47(6) Fringe Benefits
car, smaller than a truck, exemption. Tax Assessment Act
without rear side 1986.
windows

Single cab utility trucks See subsection 8(2) and

qualify for the 47(6) Fringe Benefits
Single cab ute
exemption. Tax Assessment Act
1986.

Dual cab ute – different Dual cabs qualify for the For an explanation on
from conventional goods work-related use how to work out if a dual
vehicles with extra seats exemption only if they cab is eligible for the
behind the driver and are not designed for the exemption, refer to MT
front passenger. They principal purpose of 2024 Fringe benefits
also share a common carrying passengers. tax: dual cab vehicles
chassis which can fit a eligibility for exemption
single or dual passenger where private use is
cab and alternate tray limited to certain work-
section related travel .

Four-wheel drive See TD 94/19 for

vehicles qualify for the examples of factors to
work-related use consider when deciding
exemption if they are: whether a four-wheel
designed to carry a drive vehicle (other than
load of one tonne or a utility or dual cab) is
more, or designed for the
designed to carry principal purpose of
more than eight carrying passengers.
passengers, or These factors include:
Four-wheel drive vehicle not designed for the the appearance and
(other than utilities and principal purpose of presentation of the
dual cabs) carrying passengers. vehicle
any relevant
promotional literature
the emphasis evident
in marketing
the vehicle's
specification
load carrying capacity
passenger carrying
capacity.

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 Modified vehicles qualify See MT 2033 Fringe
for the work-related use benefits tax: application
exemption if, for the of sub-section 8(2)
entire FBT year when exemption to modified
Modified vehicle the car is provided, a cars.
modification or alteration
permanently affects the
inherent design of the
vehicle (for example,
hearses).
Other road vehicles See subsection 8(2) and
qualify for the work- 47(6) Fringe Benefits
related used exemption Tax Assessment Act
if they are designed to 1986.
carry:
Other road vehicle a load of one tonne or
more, or
more than eight
passengers.

Load carrying capacity calculation

You can use the following formula to calculate the carrying capacity of a vehicle:

Maximum loaded vehicle weight (for example, gross vehicle weight – typically
shown on the compliance plate attached to a vehicle's engine bay, door pillar or
footwell by the manufacturer or importer).

Less:

Unladen vehicle weight (for example, basic kerb weight) – this is, the weight of
the vehicle with a full capacity of lubricant, coolant and fuel together with spare
wheel, tools (including jack) and installed options. It does not include the weight
of goods or occupants.

FBT treatment when exemption requirements not met

When the usage requirements for this exemption are not met, the employee's use of
the car is a fringe benefit as outlined in Table 2.

Table 2: FBT treatment when usage requirements for this exemption are not met

If: Then:

the vehicle is a car your employee's use of the car is a car fringe benefit
your employee's and all of the private use of the car, including travel

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 use of the car between home and work, is taken into account in
exceeds what is determining the business percentage.
considered minor, Note: If no log book records are maintained, the
infrequent and percentage of private use will be 100%.
irregular, and
you elect to use
the operating cost
method

the vehicle is a car your employee's use of the car is a car fringe benefit
your employee's and all of the private use of the car, including travel
use of the car between home and work, is taken into account in
exceeds what is working out when the car was used or available for the
considered minor, private use of the employee.
infrequent and
irregular, and
you use the
statutory formula
method

the motor vehicle your employee's use of the vehicle is a residual fringe
is not a car, and benefit.
your employee's Note: The operating cost method may be used for
use of the vehicle valuing the benefit. Alternatively, if there is extensive
exceeds what is business use the cents per kilometre method may be
considered minor, used to value the benefit.
infrequent and
irregular.

Working out the taxable value of a car fringe

benefit
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Car-fringe-benefits/Working-out-the-taxable-value-of-a-car-fringe-
benefit/
Last modified: 29 Mar 2019
QC 43854
To calculate the taxable value of a car fringe benefit, an employer must use either:

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 the statutory formula method (based on the car’s cost price), or
the operating cost method (based on the costs of operating the car).
You can choose whichever method yields the lowest taxable value, regardless of
which method you used in a previous year. However, if you've not kept the required
documentation for the operating cost method (such as log books), you must use the
statutory formula method.

See also:

Fringe benefits tax – car calculator

FBT – a guide for employers: Chapter 7 – Car fringe benefits (including
required documentation)
Record keeping

Car leasing fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Car-leasing-fringe-benefits/
Last modified: 09 Feb 2021
QC 64594
Before entering into a car leasing arrangement (including novated leases) with an
employee, it's important an employer or lessor understands the fringe benefits tax
(FBT) implications.

An arm’s length dealing is where each party acts independently and without
influence or control over the other. It is dependent on the nature of your relationship
and the quality of the bargaining between you

FBT implications differ depending on whether the car leasing arrangement is a:

Bona fide lease

Non-bona fide lease.

Bona fide lease

An employer or lessor will only be providing the employee with a car fringe benefit if
the car lease arrangement is bona fide.

A bona fide lease occurs where:

all dealings between the lessor, employer and employee are at arm’s length
and on commercial terms. An arm’s length dealing is where each party acts
independently and without influence or control over the other. It is dependent
on the nature of your relationship and the quality of the bargaining between

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 you
terms are not based on the reduced (net) cost of the car (that is the cost to the
employer or lessor after any trade-in credit or employee cash contribution)
the residual value of the car is
based on a reasonable valuation of estimated market value at the end of
the lease
not based on reduced (net) cost
not less than the minimum residual values set out in ATOID 2002/1004
Car lease residual values.

there is no agreement the employee, their associate, nominee, or agent will

purchase the car after the end of the lease term
be allowed to keep using the car after the lease termination.

an option for the employee, their associate, nominee or agent to purchase the
car is by request and agreement between the lessor and purchaser as to the
purchase price.
Trade-in vehicle or cash contribution
If an employee provides a trade-in vehicle or cash contribution towards the
purchase of the car, the employer or lessor must ensure this amount doesn't reduce
the lease payments or residual value.

A trade-in credit or cash contribution can't be considered a deposit or down

payment towards the purchase of the car at the end of the lease.

Also, payments made under the lease are considered capital, not lease, payments.
They are instalments under an arrangement to buy the car at some point.

Example: Bona fide lease arrangement with up-front cash contribution

Patrick’s employer plans to supply him a new car for private use, to the
value of $40,000, under a novated lease.

Patrick chooses a car with a purchase price of $41,600, which includes

$1,600 in on-road costs (registration, stamp duty, and dealer delivery fee).

Patrick pays the car dealer $1,600 of his own money to cover the on-road
costs. Patrick and his employer enter into a lease with a Fleet Management
Company (FMC). FMC, as lessor, pay the dealer the $40,000 balance.

The lease terms are:

The lease payments are calculated so that, over the three-year term,
they equal $40,000 minus the residual value at the end of the lease,
plus interest on the difference.
The residual value is calculated as 46.88% of $40,000 = $18,752. This
is the minimum residual value for leased assets with an effective life of

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 eight years specified in ATO ID 2002/1004.
For FBT purposes, the employer's expenditure is $40,000. The employer
should consider this when determining the cost price of the car.

This is considered a bona fide lease because the lease payments and
residual value reflect what would normally be payable under an ordinary
commercial motor vehicle lease.

Non-bona fide lease

If a car lease arrangement is not bona fide, the employer or lessor will not be
providing the employee with a car fringe benefit.

Depending on the arrangement, it may instead be considered a property or residual

fringe benefit, that may result in a higher FBT liability.

See also:

Property fringe benefits

Residual fringe benefits

Example: Car lease arrangement is not a bona fide lease

Sheila and her the employer enter into a novated lease with a Fleet
Management Company (FMC). Sheila will have private use of the car.

The car list price is $65,000

The FMC, as lessor, is the purchaser of the car, and is able to obtain a
$5,000 fleet discount.

The car dealer recognises this discount when the FMC acquires the car.

Sheila also trades-in her own car to the dealer, valued at $20,000.

This reduces the FMC purchase price to $40,000.

The terms of Sheila’s FMC lease are based on the (net) $40,000 cost price.

The lease agreement states:

The car may be purchased at the end of the lease for a residual value
based on the FMC’s cost price (e.g. 30% of $40,000 = $12,000). This
is less than the minimum residual value for a $60,000 car as per
ATO ID 2002/1004).
Payments, over the lease term, equal $40,000 minus the residual value
of the car at the end of the lease, plus interest on the difference.

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 As Sheila paid the $20,000 trade-in credit, her payments are less than
standard commercial lease payments, and she is also able to acquire the
car at less than market value.

Under these circumstances, we wouldn't consider the lease to be bona fide.

Sheila’s employer is not providing a car fringe benefit, but rather a property
fringe benefit.

Car parking fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Car-parking-fringe-benefits/
Last modified: 07 May 2021
QC 43855
A car parking fringe benefit will generally arise if an employer provides car parking
to an employee and all the following conditions are satisfied:

the car is parked at premises owned or leased by, or otherwise under the
control of, the provider (usually the employer)
the car is parked for a total of more than four hours between 7am and 7pm on
any day of the week
the car is owned by, leased to, or otherwise under the control of, an employee,
or is provided by the employer
the parking is provided in respect of the employee's employment
the car is parked at or near the employee's primary place of employment on
that day
the car is used by the employee to travel between home and work (or work and
home) at least once on that day
there is a commercial parking station that charges a fee for all-day parking
within one kilometre of the premises on which the car is parked and
the commercial parking station fee for all-day parking is more than the car
parking threshold, and
at the beginning of the fringe benefits tax (FBT) year, the commercial
parking station fee for all-day parking was more than the car parking
threshold.
The current car parking threshold can be found at Fringe benefits tax - rates and
thresholds.

Car parking is exempt from FBT where an employer provides parking to an

employee and not all of the above conditions are satisfied – for example, if car
parking is provided for less than a total of four hours between 7am and 7pm.

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Small business and other car parking exemptions
Car parking benefits are exempt from FBT where the benefits are provided:

by employers who meet the conditions of the small business car parking
benefits exemption
by certain research, education, religious and charitable institutions
for employees with a disability (irrespective of the type of employer).
The small business car parking benefits exemption applies if all the following
conditions are satisfied:

the parking is not provided in a commercial car park

the employer is not a government body, a listed public company, or a
subsidiary of a listed public company
for the last income year before the relevant FBT year, either the employer's
gross total income was less than $10 million
turnover was less than $10 million (less than $50 million for benefits
provided on or after 1 April 2021).
See also:

FBT – a guide for employers: Chapter 16 – Car parking fringe benefits

Entertainment-related fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Entertainment-related-fringe-benefits/
Last modified: 29 Mar 2019
QC 43856
While there is no specific 'entertainment fringe benefit' category as such, a fringe
benefit may arise from providing employees or their associates with:

entertainment by way of food, drink or recreation

accommodation or travel in connection with such entertainment.
Entertainment includes, for example:

meals and drinks including staff social functions such as Christmas parties and
farewells
sporting or theatrical events, sightseeing tours and holidays
entertaining employees and non-employees (such as clients) over a weekend
at a tourist resort or providing them with a holiday.
Recreation includes amusement, sport and similar leisure pursuits (such as a game
of golf, theatre or movie tickets, a joy flight or a harbour cruise).

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For tax and reporting purposes, providing entertainment may amount to specific
types of fringe benefits. For example:

the cost of theatre tickets purchased by an employee and reimbursed by the

employer may be an expense payment fringe benefit
providing food and drink may be a property fringe benefit
providing accommodation or transport in connection with entertainment may be
a residual fringe benefit
entertainment provided by an employer who is exempt from income tax (for
example, a registered charity) may be a tax-exempt body entertainment benefit.
You can generally claim an income tax deduction and GST credits for the cost of
providing entertainment that is a fringe benefit (see FBT – a guide for employers:
Chapter 14 Entertainment – 14.15 Income tax deductibility). If you can claim GST
credits, you claim the GST-exclusive amount as an income tax deduction.

Note that exempt benefits are not fringe benefits. Employers generally can't claim an
income tax deduction or GST credits for the cost of providing exempt benefits.

Entertainment benefits provided to people other than employees or their associates

(to clients for example) are not subject to FBT and are generally not income tax
deductible for employers.

Find out about:

When food, drink or recreation is entertainment

Exempt benefits and entertainment
Calculating the taxable value of entertainment
Record keeping and reporting
Common entertainment scenarios
Tax-exempt body entertainment fringe benefits
See also:

FBT and entertainment for non-profit organisations

FBT and entertainment for government
COVID-19 and fringe benefits tax

When food, drink or recreation is

entertainment
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benefits/Entertainment-related-fringe-benefits/When-food,-drink-or-recreation-
is-entertainment/
Last modified: 29 Mar 2019

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 QC 58432

Food or drink
To determine whether providing food or drink is entertainment, the employer needs
to look at the following factors. None of these on their own will determine whether
providing food and drink is entertainment, but the first two questions are the more
important.

Why are you providing the food or drink for employees?

Providing refreshments to enable the employee to complete the working
day in comfort is not generally entertainment.
Providing food or drink in a social situation where the purpose of the
function is for employees to enjoy themselves is likely to be
entertainment.

What type of food or drink is being provided?

The more elaborate a meal, the more likely it is that entertainment arises
from eating the meal.

When is the food or drink being provided?

Food or drink provided during work time, during overtime or while
traveling for work is less likely to be entertainment. This is because the
food or drink is generally provided for a work-related purpose rather than
for entertainment.

Where is the food or drink being provided?

Food or drink provided on your business premises or at the employee's
usual workplace is less likely to be entertainment.
Food or drink provided off your business premises, such as at a function
room, hotel or restaurant, or consumed with other forms of entertainment
is more likely to be entertainment.

Example: Determining whether food or drink is entertainment

Gabrielle is currently employed by Twinsprings Pty Ltd and will soon be

leaving the company for an overseas position in Canada.

In recognition of Gabrielle's loyalty and dedication to the company over the

last six years, her employer, Paul, wants to host a late afternoon farewell
function at a local hotel.

Drinks including alcohol and light refreshments such as finger foods will be
provided to invited staff, clients and Gabrielle's family members. Paul has
hired a mini bus to take guests to the venue.

Why – the food and drink in this situation is being provided for a social
situation where the purpose of the function is for employees,

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 associates and clients to enjoy themselves.
What – while light refreshments are often not considered to be
entertainment, as alcohol will be provided there is a social context.
When – although in this case food or drink will be provided during
working hours, it has the character of entertainment as it is a social
function.
Where – the food or drink is being provided in a private function room
at the local hotel rather than on the employer's business premises,
making it more likely to be entertainment.
Decision – providing the farewell function for Gabrielle as outlined above
would be classified as entertainment.

Recreation
Recreation that is entertainment includes amusement, sport and similar leisure time
activities such as:

a game of golf
a gym membership
memberships of sporting clubs
theatre or movie tickets
a joy flight or harbour cruise
accommodation and travel in connection with entertaining clients and/or
employees over a weekend at a tourist resort.
Next step:

Exempt benefits and entertainment

Exempt benefits and entertainment

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benefits/Entertainment-related-fringe-benefits/Exempt-benefits-and-
entertainment/
Last modified: 29 Mar 2019
QC 58433
Some benefits are exempt from FBT, including:

Minor benefits
Food or drink consumed on the premises
Taxi travel expenses

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Minor benefits
A minor benefit is exempt from FBT where it is both:

less than $300 in notional taxable value (that is, the value if it was taxable),
and
unreasonable to be treated as a fringe benefit.
To determine whether it is unreasonable for a benefit to be treated as a fringe
benefit, you need to look at each of the following five factors. None of these on their
own will determine if the benefit is an exempt minor benefit, so you need to look at
all of them.

How frequently and regularly benefits that are identical or similar to the minor
benefit are provided
the more frequently and regularly identical or similar benefits are
provided, the less likely it is that the benefit will be an exempt minor
benefit.

The total value of the minor benefit and identical or similar benefits
the greater the total value of the benefit and other identical or similar
benefits, the less likely it is that the benefit will be an exempt minor
benefit.

The total value of other associated benefits; that is, those provided in
connection with the minor benefit
the greater the total of other associated benefits, the less likely it is that
the minor benefit will be an exempt benefit.

The practical difficulty for you in determining the value of the minor benefit and
any associated benefits
the more difficult it is for you to determine the value, the more likely it is
that the benefit will be an exempt minor benefit
the more difficult it is for you to keep the necessary records in relation to
the benefit, the more likely it is that the benefit will be an exempt minor
benefit.

The circumstances in which the benefit and any associated benefits were
provided
if the benefit was provided as a result of an unexpected event, such as
overtime, it is more likely to be an exempt minor benefit
if the benefit is mainly given to the employee as a reward for services
(that is, it is remuneration), it is less likely to be an exempt minor benefit.

Where a benefit is provided under a salary sacrifice arrangement, it is a reward for

services and the minor benefits exemption doesn't apply.

See also:

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 Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits
Minor benefits exemption applies – examples

Example 1

Kate sends chocolates and flowers to Jane, an employee, on the birth of her
daughter. The chocolates and flowers have a taxable value of $105.

This is an exempt minor benefit because the chocolates have a taxable

value of less than $300 and, looking at the five factors, it would be
unreasonable to treat the chocolates and flowers as a fringe benefit.

Example 2

The manager of a small business gives Graham, an employee, a birthday

present of two theatre tickets, valued at $234.

This is an exempt minor benefit because the value of the tickets is less than
$300 and, looking at the five factors, it would be unreasonable to treat the
tickets as a fringe benefit.

Minor benefits exemption does not apply – examples

Example 3

John provides his employee Steve with a year's membership, valued at

$850, to his favourite football club.

This would not be an exempt minor benefit because the value of the
membership is $300 or more.

Example 4

Every Friday, Angela takes her two employees to a local hotel for lunch. The
lunch for each employee usually consists of a main course and a couple of

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 drinks and costs on average $45.

This would not be an exempt minor benefit because even though the value
of the Friday lunch is only $45, looking at the five factors, it would be
reasonable to treat the regular Friday lunches as a fringe benefit.

Food or drink consumed on the premises

Food or drink you provide is exempt from FBT if it is provided:

to current employees
on your business premises
on a working day.
The food or drink is exempt regardless of whether it is prepared on your premises
and whether it is entertainment. (Note that a corporate box is not considered part of
your business premises.)

But food or drink provided on your business premises to associates of employees

(such as spouses) is not exempt from FBT. Where you provide food and drink on
the same occasion to both employees and their associates, you may need to
apportion the expenditure on a per head basis.

Example: Food and drinks provided to employees and associates on

business premises

You provided alcoholic drinks and a buffet meal for 10 current employees
and their spouses on business premises on a work day. The cost was
$1,000. On a per head basis the cost of the entertainment provided to
employees was $50, which is exempt from FBT because the food and drink
was provided on a working day on the business premises. The cost relating
to entertaining the associates ($50) will be exempt from FBT if the minor
benefits exemption applies.

Next step:

Calculating the taxable value of entertainment

Calculating the taxable value of entertainment

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 benefits/Entertainment-related-fringe-benefits/Calculating-the-taxable-value-of-
entertainment/
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QC 58440
Where entertainment includes both meals and recreation you calculate the taxable
value (including apportioning the cost of benefits provided to employees and others)
using the actual value method.

Where entertainment does not include recreation, you may choose to value food,
drink and associated accommodation or travel as 'meal entertainment' under
specific valuation rules.

The information, tables and examples in this section are all based on the actual
method of valuing entertainment.

Actual method of valuing entertainment

The taxable value of the food or drink or recreation, and the associated
accommodation or travel, is the actual amount you pay for the benefit of the
employee.

When you provide entertainment to both employees and non-employees (such as

clients), only the entertainment provided to employees and their associates is
subject to FBT. If you can't easily determine the actual expenditure, you can use a
'per head' basis of apportionment.

Example: apportioning per head

Mary entertains three of her employer's clients at a local restaurant. Her

employer uses the actual method to value entertainment. Mary pays, and is
reimbursed, for the full cost of the meals. The benefit provided to Mary is an
expense payment fringe benefit. The taxable value of that benefit is 25% of
the amount reimbursed to Mary.

Hiring or leasing entertainment facilities

Where you provide entertainment by hiring or leasing entertainment facilities
(entertainment facility leasing expenses), you calculate the taxable value using
either:

the cost of the activity, or

the 50:50 split method – the taxable value is 50% of your total expenditure on
entertainment facility leasing expenses for all people (irrespective of whether
they're employees, clients or others) during the FBT year. This method can't
be used where the benefit has been provided under a salary packaging
arrangement.

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Meal entertainment
Where entertainment does not include recreation, you may choose to value food,
drink and associated accommodation or travel as 'meal entertainment', unless the
entertainment is provided under a salary packaging arrangement. If you make this
choice, instead of using the per head basis to apportion benefits between staff (and
their associates) and others, you calculate the taxable value using either:

the 50:50 split method – the taxable value is 50% of your total expenditure in
providing meal entertainment to all people (irrespective of whether they're
employees, clients or others) during the FBT year, or
the 12-week method – the taxable value is your total expenditure in providing
meal entertainment to all people during the FBT year, multiplied by a
percentage calculated from a register kept for a continuous period of 12
weeks. The register must include details of the meal entertainment provided,
including costs and the recipients.
Meal entertainment includes:

providing entertainment by way of food or drink

providing accommodation or travel in connection with, or to facilitate the
provision of, such entertainment, or
paying or reimbursing expenses incurred by the employee for the above.
Recreation includes:

amusement, sport and similar leisure time activities, such as a game of golf,
theatre or movie tickets, a joy-flight or a harbour cruise.
If you choose to classify a fringe benefit as a meal entertainment fringe benefit, you
have to classify all fringe benefits arising from providing meal entertainment during
the FBT year as such.

Both of these methods are based on your total meal entertainment expenditure,
including expenditure that may otherwise be exempt from FBT or not normally
subject to FBT, such as providing food and drink to employees on your business
premises and providing meals for clients.

You must decide to classify fringe benefits as meal entertainment no later than the
day your FBT return is due to be lodged, or if you don't have to lodge, by May 21.

See also:

FBT – a guide for employers: Chapter 14 – Entertainment – see 14.8 How to

calculate the taxable value of a meal entertainment fringe benefit
Next step:

Record keeping and reporting

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Record keeping and reporting
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benefits/Entertainment-related-fringe-benefits/Record-keeping-and-reporting/
Last modified: 29 Mar 2019
QC 58441
On this page:

Record keeping
Reporting on FBT return
Reporting on employees' payment summaries or through Single Touch Payroll

Record keeping
Employers should record the following information on entertainment they provide so
the taxable value of the fringe benefit can be calculated:

the date you provided the entertainment

who is the recipient of the entertainment (are they an employee, associate of
the employee or another person)
the cost of the entertainment
the kind of entertainment provided
where the entertainment is provided.

Reporting on FBT return

Taxable entertainment-related fringe benefits may be reported on your FBT return
as:

an expense payment fringe benefit

a property fringe benefit
a residual fringe benefit, or
a tax-exempt body entertainment benefit.

Reporting on employees' payment summaries or through

Single Touch Payroll
If you provide fringe benefits with a total non-grossed-up taxable value of more than
$2,000 to an employee in an FBT year, you must report the grossed-up taxable
value of the fringe benefits on the employee's payment summary or through Single
Touch Payroll for the corresponding income year (1 July to 30 June).

Recreation must be reported on your employee's payment summary or through

Single Touch Payroll.

However, the following fringe benefits are excluded from the reporting requirements
(but you still may need to pay FBT on them):

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 entertainment by way of food and drink, and associated benefits, such as
travel and accommodation
hiring or leasing entertainment facilities such as corporate boxes.
If these benefits are provided under a salary packaging arrangement on or after 1
April 2016, they are not excluded from the reporting requirements.

Note that exempt benefits are not fringe benefits and are not reportable on your
employee's payment summary or through Single Touch Payroll. Benefits that are
exempt because an employee works for a non-profit organisation may still be
reportable.

See also:

Reporting, lodging and paying FBT

Common entertainment scenarios

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benefits/Entertainment-related-fringe-benefits/Common-entertainment-
scenarios/
Last modified: 29 Mar 2019
QC 58442

Example 1 – Christmas party on the business premises – cost is less than

$300

A company holds a Christmas lunch on its business premises on a

working day. Employees, their partners and clients attend. Food and
drink is provided at the party and the company provides taxi travel
home. The cost per head is $125.
Entertainment is being provided

A party for employees, associates and clients is entertainment,

because the purpose of the function is for people attending to enjoy
themselves.
Employees – exemption applies

Food and drink – the food or drink provided to employees is exempt

from FBT because it's provided and consumed on a working day on the
business premises.
Taxi travel – the taxi travel is exempt from FBT because there is a

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 specific FBT exemption for taxi travel provided to an employee directly
to or from the workplace.
Associates – exemption applies

Food, drink and taxi travel: The food, drink and taxi travel provided to
the employees' partners (associates) is exempt from FBT because of
the minor benefits exemption.
Clients – no FBT

Clients' food drink and taxi travel: There is no FBT on benefits provided
to clients.
Income tax and GST credits

The employer can't claim an income tax deduction or GST credits for
the food, drink or taxi travel provided for employees, associates or
clients.

Example 2 – Gym membership

A conveyancing firm pays a one-year gym membership costing $480

per person for the company's director and each employee.
Entertainment is being provided

Paying for employees to have membership of a gym is providing

recreation entertainment.
Director – no exemption

The company will have to pay FBT on the gym membership provided to
the director, because they're an employee of the company. The minor
benefits exemption doesn't apply because the cost of the gym
membership is $480 per employee.
Other employees – no exemption

The company would have to pay FBT on the gym membership

provided to its other employees. The minor benefits exemption doesn't
apply, because the cost of the gym membership is $480 per employee.
Income tax and GST credits

The employer can claim an income tax deduction and GST credits for
the cost of the gym membership for its employees and for the FBT
paid.

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Example 3 – Holiday given as reward – cost is $300 or more

A computer manufacturer offers a reward to employees of Home Office,

a retail computer store.
The retailer agrees that the manufacturer can offer a reward to its
employees.
If an employee sells 200 computers in a month, they will receive a
holiday consisting of two nights' accommodation at the coast and two
tickets to the aquarium including a swimming-with-sharks experience.
The total value of each holiday package is $600.
Entertainment is being provided

Providing employees with a holiday and tickets to the aquarium is

recreation entertainment.
Employees – no exemption

No exemption applies to the accommodation and tickets given to the

employee who meets the sales target. The minor benefits exemption
doesn't apply in this case because the value of the holiday package is
$600.
FBT liability – retailer

The retailer, as the employer, would pay the FBT in this case as the
benefits are being provided under an agreement with the manufacturer.
Income tax and GST credits

The retailer can claim an income tax deduction for the FBT paid.
The manufacturer can claim an income tax deduction and GST credits
for the cost of purchasing the accommodation and tickets.

Example 4 – Golf day for employees, associates and clients – cost is $320
per person

Paul, an employee, takes several clients and his partner to a corporate golf
day paid for by his employer. The event is not held on a working day and
Paul has been provided with taxi vouchers to escort his clients to and from
the event. His taxi trips didn't start or end at the workplace.

Entertainment is being provided

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Entertainment is being provided as attending a golf day is a social event and
therefore its purpose is entertainment related.

Employees – no exemption

The food, drink and taxi travel is not exempt from FBT. The minor benefit
exemption doesn't apply because the cost per person is $320. A taxi travel
exemption doesn't apply as Pauls' trip did not begin or end at the workplace.

Associates – no exemption

The food, drink and taxi travel is not exempt from FBT. The minor benefit
exemption doesn't apply because the value of the benefit is $320.

Income tax and GST credits

The employer is entitled to an income tax deduction and GST credit for the
cost of providing the benefit to employees and their associates and the FBT
paid.

Clients – no FBT payable

There is no FBT payable on the food or drink, and taxi travel provided to
clients.

Income tax and GST credits

The employer can't claim an income tax deduction or GST credits for food or
drink provided to the clients.

Example 5 – Celebration afternoon tea on the business premises – cost is

$25 per head

Anjelica is getting married. To celebrate, her employer holds an afternoon

tea on the business premises and invites Anjelica's associates, work
colleagues and clients.

Entertainment is being provided

The afternoon tea provided to employees, associates and clients in this

situation is a social event and is therefore entertainment.

Employees – exemption applies

The exemption for food and drink provided and consumed on business
premises on a working day applies to the employees.

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Associates – exemption applies

The food and drink provided to the employee's associates is exempt from
FBT because of the minor benefits exemption. That is, the cost of the
activity is less than $300 per employee and, considering the five factors, it
would be unreasonable to treat the benefit as a fringe benefit.

Clients – no FBT

There is no FBT on benefits provided to clients.

Income tax and GST credits

The employer can't claim an income tax deduction or GST credits for food or
drink provided to the employees, their associates or clients.

Example 6 – Business planning day

An insurance company organises a planning day for their managers at a

conference centre. Morning and afternoon tea and a three-course lunch
(excluding alcohol) are provided at a cost of $125 per head.

Entertainment is not being provided

Providing light meals is not considered entertainment. Although the lunch

provided in this situation is work-related, the three-course meal would be
elaborate and therefore considered to be entertainment.

Employees – exemption applies

The exemption for food and drink provided and consumed on the employer's
premises on a work day doesn't apply. However, the minor benefit
exemption applies as the cost of the activity is less than $300 per employee
and, considering the other factors, it would be unreasonable to treat the
benefit as a fringe benefit.

Income tax and GST credits

As the minor benefit exemption applies, the employer can't claim an income
tax deduction or GST credits for food or drink provided.

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Tax-exempt body entertainment fringe benefits
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benefits/Entertainment-related-fringe-benefits/Tax-exempt-body-entertainment-
fringe-benefits/
Last modified: 29 Mar 2019
QC 43857
A tax-exempt body entertainment fringe benefit may arise from entertainment
expenses incurred by an employer who is wholly or partially exempt from income
tax, or who does not derive assessable income from the activities to which the
entertainment relates.

If your entity is a charity, you must be registered with the Australian Charities and
Not-for-profits Commission (ACNC) as a charity and endorsed by the ATO as
income tax-exempt.

There are limited circumstances under which a tax-exempt body entertainment

benefits are exempt from FBT.

See also:

FBT – a guide for employers: Chapter 15 – Tax-exempt body entertainment

fringe benefits
FBT and entertainment for non-profit organisations – in detail

Expense payment fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Expense-payment-fringe-benefits/
Last modified: 25 Aug 2020
QC 43858
An employer may provide an expense payment fringe benefit if an employee incurs
expenses and the employer either:

reimburses them for the expenses, or

pays a third party for the expenses.
The expenses can be business or private expenses or a combination of both, but
they need to be incurred by the employee.

If the employer incurs the expense, for example through a corporate credit card,
they won't have provided an expense payment fringe benefit. However, depending
on what is paid for, a property, residual, meal entertainment or tax-exempt body

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entertainment fringe benefit could arise.

See also:

FBT – a guide for employers: Chapter 9 – Expense payment fringe benefits

Entertainment-related fringe benefits
Property fringe benefits
Residual fringe benefits
COVID-19 and Fringe benefits tax

Debt waiver fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-
benefits/Debt-waiver-fringe-benefits/
Last modified: 29 Mar 2019
QC 43860
If an employer waives an employee's debt (that is, doesn't require repayment) they
will have provided a debt waiver fringe benefit.

For example, if the employer sells goods to an employee and later tells them they're
not required to pay the invoiced amount, they have provided a debt waiver fringe
benefit.

However, an employee debt that the employer writes off as a genuine bad debt
doesn't amount to a debt waiver fringe benefit.

See also:

FBT – a guide for employers: Chapter 8 – Loan and debt waiver fringe benefits
Loan fringe benefits

Loan fringe benefits

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benefits/Loan-fringe-benefits/
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QC 43859
An employer provides a loan fringe benefit if they give their employee an interest-
free or low-interest loan. A low-interest loan is one where the rate of interest is less

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than the benchmark interest rate (see Fringe benefits - rates and thresholds).

See also:

FBT – a guide for employers: Chapter 8 – Loan and debt waiver fringe benefits
Debt waiver fringe benefits

Housing fringe benefits

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benefits/Housing-fringe-benefits/
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QC 43861
A housing fringe benefit may arise if an employer provides their employee with
accommodation rent-free or at a reduced rent where the accommodation is the
employee's usual place of residence.

A unit of accommodation includes any of the following:

a house, flat or home unit

accommodation in a hotel, motel, guesthouse, bunkhouse or other living
quarters
a caravan or mobile home
accommodation on a ship or other floating structure.
However, accommodation provided to an employee in a remote area may be exempt
from fringe benefits tax (FBT).

See also:

FBT – a guide for employers: Chapter 10 – Housing fringe benefits

Fringe benefits tax – remote areas
Board fringe benefits
COVID-19 and Fringe benefits tax

Board fringe benefits

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benefits/Board-fringe-benefits/
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 QC 43862
Providing meals to employees is a board fringe benefit if the employee is entitled to
have accommodation provided and all of the following apply:

at least two meals a day are ordinarily provided under an industrial award or
employment arrangement
the meal is supplied by the employer (or a related company in a wholly owned
group)
the meal is prepared and supplied on the employer's (or its related company's)
premises or worksite, or a place adjacent to the worksite.
Such arrangements could include, for example, meals provided:

in a dining facility located on a remote construction site, oil rig or ship

to a live-in housekeeper or resident teachers in a boarding school.
See also:

FBT – a guide for employers: Chapter 13 – Board fringe benefits

Housing fringe benefits

Living away from home allowance fringe

benefits
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benefits/Living-away-from-home-allowance-fringe-benefits/
Last modified: 29 Mar 2019
QC 43863
A living-away-from-home allowance (LAFHA) fringe benefit may arise if the employer
pays an allowance to their employee to cover additional expenses and any
disadvantages suffered due to them being temporarily required to live away from
their normal residence to perform their employment duties.

However, the taxable value of the LAFHA fringe benefit can be reduced by certain
amounts relating to accommodation and food and drink expenses where:

your employee maintains a home in Australia at which they usually reside

your employee provides you with a declaration about living away from home
the fringe benefit relates to the first 12-month period at a particular work
location.
Employees who work on a fly-in fly-out or drive-in drive-out basis don't have to
maintain a home in Australia and don't have the 12-month limitation.

Where these conditions are not met the taxable value of the fringe benefit is the

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amount of the allowance paid to the employee.

See also:

Employee declarations
Housing fringe benefits
Expense payment fringe benefits
Residual fringe benefits
FBT – a guide for employers: Chapter 11 – Living away from home allowance
fringe benefits

Property fringe benefits

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benefits/Property-fringe-benefits/
Last modified: 25 Aug 2020
QC 43864
A property fringe benefit may arise when you provide your employee with property,
either free or at a discount.

For FBT purposes, property includes:

goods, such as items of clothing or a television

real property, such as land and buildings
financial assets, such as shares or bonds.
See also:

FBT – a guide for employers: Chapter 17 – Property fringe benefits

COVID-19 and Fringe benefits tax

Residual fringe benefits

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benefits/Residual-fringe-benefits/
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QC 43866
A residual fringe benefit may arise when you provide an employee with any benefit
(including a right, privilege, service or facility) that doesn't fall into one of the specific

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categories of fringe benefits.

Examples of residual fringe benefits:

use of employer's property, such as a video camera or television

provision of a service, such as advice given by a solicitor
private use of a motor vehicle that is not a 'car' for fringe benefits tax (FBT)
purposes, such as a one-tonne utility.
See also:

FBT – a guide for employers: Chapter 18 – Residual fringe benefits

COVID-19 and Fringe benefits tax

Reducing your FBT liability

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liability/
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QC 43871
Employers can reduce their FBT liability by:

providing benefits that are income tax deductible

using employee contributions
providing a cash bonus
providing benefits that are exempt from FBT.

Providing benefits that are income tax deductible

You may not have an FBT liability if you give an employee a benefit that they would
otherwise have been able to claim as an income tax deduction.

Example: benefit where the employee is entitled to an income tax deduction

Sue, the manager of a hairdressing salon, pays for two senior stylists to
attend a hair colouring seminar run by a hairdressing association. The
course, paid for by the business, is to reward the senior stylists for their
work performance over the last year.

There is no FBT payable because the two employees would be entitled to a

full income tax deduction for the cost of attending the course, if they had
paid for it themselves.

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Using employee contributions
You can reduce your FBT liability by having your employee contribute towards the
cost of a fringe benefit.

The contribution is usually a cash payment made to you or the person who provided
the benefit. Under the valuation rules for most categories of fringe benefits, the
taxable value of a fringe benefit can be reduced by the amount of the employee
contribution.

Example: employer uses employee contributions

A company golf team has a golfing day once a month and a golfing day with
clients once a quarter. The employer pays the green fees of $45 a month,
with the employees reimbursing the employer 75% of the fees. The
employer will only have to pay FBT on the 25% of the green fees that are
not reimbursed.

Providing a cash bonus

If you provide your employee with a cash bonus instead of a benefit you won't have
to pay FBT, and the employee will pay income tax on the amount.

See also:

FBT – a guide for employers: Chapter 19 – Reductions in fringe benefit taxable

value
FBT exemptions and concessions

Salary sacrifice arrangements

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arrangements/
Last modified: 18 Aug 2020
QC 43872
Under a salary sacrifice arrangement between the employer and their employee, the
employee agrees to forgo part of their future entitlement (such as salary or wages)
in return for benefits of a similar value. Salary sacrificing is sometimes called salary
packaging or total remuneration packaging.

Under an effective salary sacrifice arrangement:

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 the employee pays income tax on the reduced salary or wages
the employer may be liable to pay fringe benefits tax (FBT) on the benefits
provided in lieu of salary
if the arrangement involves receiving super contributions in lieu of salary or
wages, the contributions are classified as employer super contributions (rather
than employee contributions) and are taxed in the super fund
from 1 January 2020, salary sacrificed contributions don't:
reduce the ordinary time earnings that the employer is required to
calculate their employee's super entitlement on
count towards the amount of super guarantee contributions that the
employer is required to make in order for them to avoid the super
guarantee charge.

If the arrangement doesn't meet the requirements of an effective salary sacrifice

arrangement, the benefits are taxed as assessable (or taxable) income of the
employee at the time they are provided.

Note: While we provide guidance on how FBT is calculated, we do not give financial
advice. Employees should seek financial advice before entering into a salary
sacrifice arrangement.

Find out about:

Requirements for an effective salary sacrifice arrangement

Tax treatment of benefits
Implications for employees
Salary sacrificing super
See also:

Fringe benefits tax – a guide for employers

Taxation Determination TD 2013/20 Fringe benefits tax: when an employer
reimburses an amount of expenditure incurred by an employee to a third
party, under a salary sacrifice (or similar) arrangement with that employee
where that expenditure is notionally subject to Division 35 of the Income Tax
Assessment Act 1997, is the amount included under subsection 35-10(2E)
increased when applying the 'otherwise deductible rule' in section 24 of the
Fringe Benefits Tax Assessment Act 1986?
Taxation Ruling TR 2013/6 Fringe benefits tax: otherwise deductible rules and
Division 35 of the Income Tax Assessment Act 1997
Taxation Ruling TR 2001/10 Income tax: fringe benefits tax and
superannuation guarantee: salary sacrifice arrangements
If you need more information you can:

phone 13 28 66
speak to your adviser.

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Requirements for an effective salary sacrifice
arrangement
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arrangements/Requirements-for-an-effective-salary-sacrifice-arrangement/
Last modified: 29 Mar 2019
QC 58424

Arrangement in place before work starts

A salary sacrifice arrangement needs to be in place before the work starts. If the
arrangement isn't put in place until after the work has been performed, it may be
ineffective, in which case the benefits are taxed as assessable (or taxable) income
of the employee at the time they are provided.

It is advisable that:

the employer and employee clearly understand and agree on all the terms of a
salary sacrifice arrangement
the arrangement be documented in a written agreement to avoid uncertainty
and disputes.
Subject to the terms of any contract of employment or industrial agreement,
employees can renegotiate a salary sacrifice arrangement at any time. Under a
renewable contract, the employee can renegotiate amounts of salary or wages to be
sacrificed before the start of each renewal.

A contract of employment includes details of remuneration, including any salary

sacrifice arrangement. The contract can be varied by agreement between the
employer and employee.

See also:

Contact the Fair Work Commission for more information

No access to sacrificed salary

The employee must permanently forgo the sacrificed salary for the period of the
arrangement. If a fringe benefit hasn't been provided and is cashed out at the end of
a salary sacrifice arrangement accounting period, the amount cashed out is salary
and is taxed as normal income.

Similarly, if the employee directs the employer to make payments to a third party
from salary that has already been earned (for example, to pay health insurance
premiums, loan repayments, union fees or credit card repayments), these do not
constitute an effective salary sacrifice arrangement. The third-party payments are
made from after-tax or net amounts of salary.

Note: Any salary and wages, leave entitlements, bonuses or commissions that

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accrued before entering into an arrangement can't be part of an effective salary
sacrifice arrangement.

Tax treatment of benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Salary-sacrifice-
arrangements/Tax-treatment-of-benefits/
Last modified: 10 Feb 2021
QC 58425
There is no restriction on the types of benefits that can be included in a salary
sacrifice arrangement. Benefits are generally treated as fringe benefits, exempt
benefits, or employer super contributions.

Fringe benefits
Common fringe benefits include:

cars
property (including goods and shares or bonds)
expense payments (such as payment of loan repayments, school fees, child
care costs and home phone costs).

Exempt benefits
Some benefits are exempt from FBT, including the following work-related items
commonly provided in salary sacrifice arrangements:

a portable electronic device

computer software
protective clothing
a briefcase
a tool of trade.
The work-related items exemption is limited to:

items primarily for work-related use

one item per FBT year for those that have a substantially identical function,
unless it is a replacement item. The exception to this is that small businesses
can provide employees with more than one work-related portable electronic
device in an FBT year, even if the devices have substantially identical
functions.
From 1 April 2021, the turnover for determining whether an entity is a small
business entity increases from less than $10 million to less than $50 million for
benefits provided on or after that date.

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See also:

Small business entity concessions - eligibility

Super
Salary-sacrificed super contributions under an effective salary sacrifice
arrangement are considered to be employer contributions. These are not fringe
benefits when paid for an employee to a complying super fund.

From 1 January 2020, salary sacrificed contributions don't:

reduce the ordinary time earnings that the employer is required to calculate on
their employee's super entitlement
count towards the amount of super guarantee contributions that an employer is
required to make in order for them to avoid the super guarantee charge.
However, super contributions made for the benefit of an associate, such as the
employee's spouse, are treated as a fringe benefit. Similarly, contributions paid to a
non-complying super fund are a fringe benefit.

Assessable income
An employee only pays income tax on their reduced salary, but they receive the
reduced salary plus the benefits. They can make employee contributions out of their
after-tax income. These can count towards the cost of the benefits and reduce any
reportable fringe benefits amount.

Under an effective arrangement, the employee's income tax liability should be less
than it would have been without an arrangement. However, before entering into a
salary sacrifice arrangement they should consider the associated costs. This
includes the amount to be sacrificed and any surcharges or obligations from having
the benefits reported on their income statement in myGov or payment summary.

Implications for employees

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Salary-sacrifice-
arrangements/Implications-for-employees/
Last modified: 29 Mar 2019
QC 58426
Employees need to be aware of how entering into a salary sacrifice arrangement
affects them:

You pay income tax on the reduced salary or wages.

Your employer may be liable to pay fringe benefits tax (FBT) on the non-cash

39 of 66
 benefits you receive.
Your employer may be required to report certain benefits through Single Touch
Payroll or on your payment summary.
Salary sacrificed superannuation contributions are treated as contributions
from your employer and taxed in the superannuation fund.
On this page:

Super guarantee
Salary sacrificing a deductible expense
Fringe benefits tax
Reportable fringe benefits
See also:

The Fair Work Commission regulates employment agreements and conditions.

To check your award or agreement, contact Fair Work Commission .

Super guarantee
A salary sacrificed contribution is counted as part of the contributions made by your
employer. To ensure you receive the minimum super guarantee amount from your
employer over and above any salary sacrifice you make, you will need to have an
agreement in place to that effect. This must specify that your employer continues to
pay the minimum 9.5% super guarantee amount, without including your extra
contributions.

Without this, if an employee chose to salary sacrifice 5% of their salary into their
super, the employer would only have to contribute another 4.5% to meet the
9.5% super guarantee requirement. Similarly, if the employee chose to salary
sacrifice 9.5% or more into their super, the employer would not have to make any
additional contributions.

Where contributions are paid to a complying super fund, your earnings base may be
reduced unless the salary sacrifice arrangement states otherwise. Your earnings
base is the amount on which super contributions made by your employer are
calculated.

Salary sacrificed super contributions are taxed in the super fund under tax laws
dealing specifically with this subject. It is advisable that you and your employer
clearly understand and agree on all the terms of any salary sacrifice arrangement.

Salary sacrificing a deductible expense

If your employer pays for an expense, as part of your salary package, for which you
would normally get a tax deduction, they won't have to pay FBT on the expense.
This is known as the ‘otherwise deductible rule’. If this occurs you will not be able to
claim an income tax deduction for this expense in your personal income tax return.
This is because the ‘deductible element’ of the expense has been taken into
account when your employer calculates the taxable value of the benefit provided to
you for FBT purposes.

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 Example: Employer-paid expense

An employer reimburses an employee for work related calls on the

employee's mobile phone. The employee works out that $176 of their calls
are work-related, keeps the appropriate records and gives their employer an
employee declaration in relation to the expense.

The employer does not pay FBT on the $176 and the employee can't claim
an income tax deduction for these calls..

Fringe benefits tax

If there is any FBT payable on the benefits you received, your employer is liable to
pay that tax. Your salary may be reduced by the amount of FBT paid by your
employer as part of your salary sacrifice agreement.

Certain employers, such as public benevolent institutions, health promotion charities

and public hospitals, are not liable to pay FBT unless the amount of benefits
provided to an individual employee exceeds the relevant capping threshold (see
Fringe benefits tax – rates and thresholds).

Reportable fringe benefits

If the total taxable value of certain fringe benefits received by you in an FBT year
(1 April to 31 March) exceeds $2,000, the grossed-up taxable value of those
benefits will be recorded on your payment summary or income statement in myGov
for the corresponding income year (1 July to 30 June). Some fringe benefits, called
excluded fringe benefits, don’t have to be reported on your payment summary or
income statement, although your employer still has to pay FBT on these.

Grossing up reflects the gross salary that you would have to earn to purchase the
benefit from after-tax dollars. For payment summary and income statement reporting
purposes, this is calculated as multiplying the taxable value of the benefit by the
lower gross-up rate. The lower gross-up rate is 1.8868 for the year ended 31 March
2020, but it may change in subsequent years (see Fringe benefits tax – rates and
thresholds).

The value of fringe benefits reported on your payment summary or income

statement is known as your reportable fringe benefits amount. You will need to
show this amount (or the total of the reportable fringe benefits amounts if you
receive more than one payment summary during the year) on your tax return.

While this amount is shown on your payment summary or income statement it won't
be included in your assessable (or taxable) income or affect the amount of basic
Medicare levy payable. However, the total will be used to calculate:

the Medicare levy surcharge

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 the Division 293 tax for superannuation contributions
the super co-contribution
certain tax offsets
the private health insurance rebate
Higher Education Loan Program (HELP), Student Financial Supplement
Scheme (SFSS), Student Start-up Loan (SSL), ABSTUDY Student Start-up
Loan (ABSTUDY SSL) or Trade Support Loan (TSL) repayments
child support obligations
entitlement to certain income-tested government benefits.

Reportable fringe benefits – facts for

employees
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reportable-fringe-
benefits---facts-for-employees/
Last modified: 24 Dec 2020
QC 58427
You will have a reportable fringe benefits amount (RFBA) when:

certain fringe benefits are provided to you (or your associate in connection with
your employment)
the total non-grossed-up taxable value exceeds $2,000 in a fringe benefits tax
(FBT) year (1 April to 31 March).
While not taxable, your total RFBA from all employment is taken into account in
determining your eligibility for certain government benefits and concessions.

Your RFBA will be shown on your income statement through ATO online services in
myGov or your payment summary. You need to include it in your tax return at
label IT1. However, you:

don't include it in your total income or loss amount

don't pay income tax or Medicare levy on it.
If you lodge your tax return through a tax agent or online through myTax, you don't
generally have to do anything. Your pre-filled tax return should include any RFBAs.
Employers generally report this to us by early August for the income year just
ended.

Find out about:

Amounts reported on your income statement or payment summary

Excluded fringe benefits
Consequences of having a reportable fringe benefits amount
Reducing your reportable fringe benefits amount

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Amounts reported on your income statement or
payment summary
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reportable-fringe-
benefits---facts-for-employees/Amounts-reported-on-your-income-statement-or-
payment-summary/
Last modified: 24 Dec 2020
QC 58428
The reportable fringe benefits amount (RFBA) is:

the grossed-up taxable value of the reportable benefits

for benefits provided in the previous fringe benefits tax (FBT) year (1 April to
31 March)
shown on your income statement (through ATO online services in myGov) or
payment summary
for an income tax year (1 July to 30 June).
The RFBA for the year ending 30 June 2020 is the grossed-up taxable value of the
reportable benefits provided from 1 April 2019 to 31 March 2020.

Your employer calculates your RFBA by:

multiplying the taxable value of the reportable fringe benefits, by

the lower gross-up rate.
For the FBT year ending 31 March 2020, the lower gross-up rate is 1.8868.

For example, if the taxable value of your fringe benefits is $2,000.00, the calculation
is $2,000.00 × 1.8868 = $3,773.

The RFBA reflects the gross salary that you would have to earn to purchase the
benefit from your after-tax income.

Example: working out amounts for income statements or payment

summaries

Tim's employer provides him with a work car in the 2020 FBT year (between
1 April 2019 and 31 March 2020). The taxable value of Tim's car fringe
benefit is $2,500. Tim and his partner also stay in the company's coastal
accommodation several times a year. This has a taxable value of $800.
These fringe benefits are both reportable.

The taxable value of Tim's fringe benefits is $2,500 + $800 = $3,300. The

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 grossed-up taxable value of these benefits will appear on his income
statement or payment summary for the income year ending 30 June 2020.

The lower gross-up rate for the 2020 FBT year is 1.8868. The grossed-up
amount reported on Tim's income statement or payment summary is $6,226.
This is calculated as follows:

Total taxable value × 1.8868

= $3,300 × 1.8868

= $6,226.

See also:

FBT – a guide for employers: Chapter 5 – Reportable fringe benefits – see 5.4
Reporting reportable fringe benefits amounts

Employment finished between 1 April and 30 June

If you finish employment between 1 April and 30 June and received fringe benefits
during this time, your employer must show the RFBA for the income tax year ending
on 30 June in the following year. If your employer reports through Single Touch
Payroll, the fringe benefits you received between 1 April and 30 June will be
recorded on your income statement through ATO online services in myGov for the
following year. Or it will be recorded on your payment summary.

As the FBT year ends on 31 March, your employer can't report any fringe benefits
they provide between 1 April and 30 June until the following 31 March. This means
you may have a RFBA from a former employer even though you won't receive any
salary or wages from them in that income year.

Your employer has until 14 July following the end of the income year covered by the
income statement or payment summary to provide you with this information. They
do this by finalising their Single Touch Payroll data to generate your income
statement through ATO online services in myGov. Or they can provide you with a
payment summary.

You need to report the RFBA from your former employer from the earlier income
year on your individual tax return at Label IT1.

Example: Finishing employment

Joan finishes employment with her employer on 15 May 2020. From 1 April
2020 to 15 May 2020, she receives fringe benefits from that employer with a
reportable value of $4,000.

Joan's employer is required to report this reportable fringe benefits amount

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 on Joan's income statement or payment summary for the income year
ending on 30 June 2021. They have until 14 July 2021 to finalise their
Single Touch Payroll data or issue the payment summary.

Joan records the RFBA of $4,000 on her income tax return at Label IT1 for
the year ending on 30 June 2021.

See also:

Reportable fringe benefits

Excluded fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reportable-fringe-
benefits---facts-for-employees/Excluded-fringe-benefits/
Last modified: 24 Dec 2020
QC 58437
The following 'excluded fringe benefits' don't have to be reported on your income
statement through ATO online services in myGov or payment summary:

car parking fringe benefits

remote area housing assistance, home ownership schemes, and repurchase
schemes
if you live in a remote area – costs of occasional travel to a major Australian
population centre
benefits you receive to ensure your security and personal safety because of
your job
meal entertainment and entertainment facility leasing benefits – where these
benefits are not provided under a salary sacrifice arrangement
emergency or other essential health care you receive as an Australian citizen
or permanent resident
while you are working outside Australia, and
for which you can't claim a Medicare benefit
certain benefits provided to you if you are either a
defence force member
police officer
car benefits coming from your private use of pooled or shared cars.
See also:

FBT – a guide for employers: Chapter 5 – Reportable fringe benefits

FBT – a guide for employers: Chapter 6 – Not-for-profit organisations and
fringe benefits tax

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Consequences of having a reportable fringe
benefits amount
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reportable-fringe-
benefits---facts-for-employees/Consequences-of-having-a-reportable-fringe-
benefits-amount/
Last modified: 24 Dec 2020
QC 58436
Your total reportable fringe benefits amount (RFBA) for all employment is not
taxable. However, it is used for:

calculating your liability for the Medicare levy surcharge

calculating your child's adjusted taxable income to determine whether they are
considered a dependant for Medicare levy purposes
determining your entitlement to the private health insurance rebate
determining whether you are liable for Division 293 tax for superannuation
contributions
determining your eligibility for the government co-contribution for personal
super co-contributions you made
determining your eligibility for the low-income super tax offset for concessional
(before tax) super contributions that you or your employer pay into your super
fund
determining whether you can offset your business loss against other income
(non-commercial losses)
working out if you are entitled to reduce your employee share scheme discount
working out the amount you must repay against your debt for
Higher Education Loan Program (HELP)
Vocational Education and Training Student Loan (VETSL)
Student Financial Supplement Scheme (SFSS)
Student Start-up Loan (SSL)
ABSTUDY Student Start-up Loan (ABSTUDY SSL)
Trade Support Loan (TSL)
determining your entitlement to a tax offset for
contributions you made to your spouse's super
invalid and invalid carer
zone or overseas forces
net medical expenses for disability aids, attendant care or aged care
Medicare levy surcharge (lump sum payment in arrears)
seniors and pensioners
determining your eligibility for family assistance payments, including
Family Tax Benefit Part A and Part B

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 Child Care Subsidy (from 2 July 2018)
Child Care Benefit for approved care (prior to 2 July 2018)
Parental Leave Pay
Dad and Partner Pay
working out your child support obligations.

Employees of not-for-profit organisations

For employees of the following not-for-profit organisations, 51% of their total RFBA
is taken into account in determining eligibility for family assistance and youth income
support payments:

a registered public benevolent institution that is endorsed by the Commissioner

of Taxation as eligible for exemption from fringe benefits tax
a public hospital
a hospital carried on by a society or association that is a rebatable employer
a health promotion charity that is endorsed by the Commissioner of Taxation
as eligible for exemption from fringe benefits tax
a public ambulance service provider.
The not-for-profit organisations are described in more detail in section 57A of the
Fringe Benefits Tax Assessment Act 1986.

See also:

Income tests
Services Australia website – What is adjusted taxable income – include the
value of reportable fringe benefits when calculating your entitlement to
government benefits

Reducing your reportable fringe benefits

amount
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reportable-fringe-
benefits---facts-for-employees/Reducing-your-reportable-fringe-benefits-
amount/
Last modified: 24 Dec 2020
QC 58435
You can choose to reduce the amount of fringe benefits shown on your income
statement (through ATO online services in myGov) or payment summary for future
years. This may better suit your circumstances.

You can reduce your reportable fringe benefits by:

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 cashing out benefits – arranging with your employer to replace your fringe
benefits with cash salary
making employee contributions out of your after-tax income towards the cost of
the benefits. This is generally by making a cash payment to your employer or
the person who provided the benefit. (For example, you can make an
employee contribution towards a car fringe benefit by paying a third party for
some of the operating costs – such as fuel –that your employer doesn't
reimburse.)
changing the benefits you receive to exempt benefits.
See also:

Reportable fringe benefits

Calculating your FBT

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Calculating-your-
FBT/
Last modified: 29 Mar 2019
QC 43873
Employers must self-assess the amount of fringe benefits tax (FBT) they have to
pay when lodging their FBT return at the end of each FBT year (1 April to
31 March).

When working out your FBT liability you gross-up the taxable value of benefits you
provide, to reflect the gross salary employees would have to earn at the highest
marginal tax rate (including Medicare levy) to buy the benefits after paying tax.

There are two different gross-up rates to calculate fringe benefits taxable amounts:

higher gross-up rate (type 1) is used where you (or other benefit providers) are
entitled to a GST credit for GST paid on benefits provided to an employee
(known as GST-creditable benefits).
lower gross-up rate (type 2) is used where there is no entitlement to a GST
credit.
The tax payable is the fringe benefits taxable amount multiplied by the FBT rate.

To calculate how much FBT you have to pay:

Step 1 Work out the taxable value of each fringe benefit you provide to each
employee. The rules for calculating the taxable value of a fringe benefit
vary according to the type of benefit.

Step 2 Work out the total taxable value of all the fringe benefits you provide for

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 which you can claim a GST credit (including excluded fringe benefits).

Step 3 Work out the grossed-up taxable value of these benefits by multiplying
the total taxable value of all the fringe benefits you can claim a GST
credit for (from step 2) by the type 1 gross up rate.

Step 4 Work out the total taxable value of all those benefits for which you can't
claim a GST credit (for example, supplies you made that were either
GST-free or input taxed).

Step 5 Work out the grossed-up taxable value by multiplying the total taxable
value of all the fringe benefits you can't claim a GST credit for (from
step 4) by the type 2 gross up rate.

Step 6 Add the grossed-up amounts from steps 3 and 5. This is your total
fringe benefits taxable amount.

Step 7 Multiply the total fringe benefits taxable amount (from step 6) by the
FBT rate. This is the total FBT amount you have to pay.

See also:

Types of fringe benefits

Next steps:

Reporting, lodging and paying FBT

Registering for FBT

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Registering-for-FBT/
Last modified: 29 Mar 2019
QC 43874
Employers must be registered for fringe benefits tax (FBT) and lodge an FBT return
if they're liable to pay FBT during an FBT year (1 April to 31 March).

To register:

online – if you already have an Australian business number (ABN) using the
Australian Government Business Registration Service
by phone – if you're an authorised contact for the business, phone us on the
business enquiries line
through your registered tax agent
complete the paper form Application to register for fringe benefits tax

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 by lodging your annual FBT return.
If you're registered for FBT but don’t need to lodge an FBT return for the year,
complete a Fringe benefits tax – notice of non-lodgment.

See also:

Reporting, lodging and paying FBT

Reporting, lodging and paying FBT

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/
Last modified: 12 May 2021
QC 43875
Employers must lodge a fringe benefits tax (FBT) return if they have a liability – also
known as a fringe benefits taxable amount – during an FBT year
(1 April to 31 March).

If you prepare your own FBT return, you can lodge up to 25 June without incurring a
failure to lodge (FTL) penalty. The payment due date is 21 May.

If you have a tax agent that lodges your return electronically, the due date to lodge
and pay is 25 June.

If your tax agent lodges your return by paper, the due date to lodge and pay is
21 May.

If you're registered for FBT but don’t need to lodge an FBT return for the year,
complete a Fringe benefits tax – notice of non-lodgment.

Find out about:

Record keeping
Employee declarations
Reportable fringe benefits
How to lodge your FBT return
How to pay FBT
Paying FBT by instalments
Difficulty paying your FBT
See also:

Calculating your FBT

Registering for FBT

50 of 66
Record keeping
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/Record-keeping/
Last modified: 29 Mar 2019
QC 43876
You must keep all records relating to the fringe benefits you provide, including how
you calculated the taxable value of benefits. You must also keep records if you want
to take advantage of various exemptions or concessions that reduce your fringe
benefits tax (FBT) liability.

These records must generally be kept for five years from the date your FBT return
was lodged, or if you don't have to lodge, the due date for lodgment of FBT returns
generally (that is, 21 May). All records should be written in English, or if stored
electronically must be in a form that is readily accessible.

Examples of these records include:

calculations
worksheets
employee declarations
elections
invoices
receipts
bills of sales
lease documents
travel diaries
logbooks
odometer records.
You don't need to submit these records with your FBT return.

See also:

FBT – a guide for employers: Chapter 4 – Fringe benefits tax record-keeping

Employee declarations

Employee declarations
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/Employee-declarations/
Last modified: 29 Mar 2019
QC 43877

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An employee declaration is written advice given to you by your employee containing
information relating to the fringe benefits they have received. You need to keep
employee declarations to apply certain fringe benefit tax (FBT) concessions.

You can also receive employee declarations electronically. However, the

declaration must still be signed by the employee using an electronic signature.
Employees can provide employee declarations to you, in the approved format,
electronically with their electronic signature if:

you consented to the method of electronic signature

the electronic declaration is readily accessible and understandable, and
convertible into written English, in order to determine your FBT liability.
See also:

FBT – a guide for employers: Chapter 4 – Fringe benefits tax record-keeping –

see 4.8 Employee declarations, 4.9 Electronic declarations
Declarations – for a list of approved employee declaration forms.
You must obtain all employee declarations no later than the day on which your FBT
return is due to be lodged.

If you don't have to lodge a return, you must have the employee declaration by
21 May.

Note: Don't send us the declarations. You are required to retain these as part of
your business records.

See also:

Record keeping

Reportable fringe benefits

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/Reportable-fringe-benefits/
Last modified: 30 May 2019
QC 43879
If the value of certain fringe benefits you provide to an individual employee exceeds
$2,000 in a fringe benefits tax (FBT) year (1 April to 31 March), you must report the
grossed-up taxable value of those benefits on their payment summary or through
Single Touch Payroll for the corresponding income year (1 July to 30 June). These
are called reportable fringe benefits.

You need to allocate the reportable fringe benefits to the relevant employee and
include any fringe benefits provided to associates of the employee. The amount

52 of 66
reported on their payment summary or income statement in myGov is not included in
an employee's assessable income; nor does it affect the amount of standard
Medicare levy payable. However, it is included in income tests for some government
benefits and obligations.

Where employees share a benefit, you must allocate their respective shares
individually.

See also:

FBT – a guide for employers: Chapter 5 – Reportable fringe benefits

Reportable fringe benefits – facts for employees
Calculating your FBT
Voluntary reporting through Single Touch Payroll

How to pay FBT

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/How-to-pay-FBT/
Last modified: 12 May 2021
QC 43885
You must pay the total fringe benefits tax (FBT) amount you owe for the FBT year
by 21 May unless you've made other arrangements with us.

You pay FBT either annually or by quarterly instalments with your activity
statements. Your payment must reach us on or before its due date to avoid interest
and penalties.

You can pay your FBT by a number of methods including BPAY, credit/debit card,
direct credit. See How to pay for all the options.

If you haven’t paid FBT before, or if the amount of FBT you had to pay for the
previous year was less than $3,000, you only make one payment for the year when
you lodge your FBT return. In future years, we may ask you to make quarterly FBT
instalments through your quarterly activity statement.

Paying FBT by instalments

If this isn't your final FBT return and you had to pay FBT of $3,000 or more, you
must pay quarterly FBT instalments for the next FBT year.

We will send you pre-printed activity statements before the lodgment date, including
your:

due dates for lodging and paying

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 FBT instalment amount.
If you pay your FBT by instalments, you must lodge all your activity statements for
the FBT year ending 31 March, including the March quarter, before lodging your
FBT return. Your FBT return won't be processed until all your activity statements
are lodged.

If you prepare your own return and need to make a balancing payment, the payment
is due by 21 May.

If you didn't have an FBT liability for an FBT year, and you didn't vary your FBT
instalments to nil during that year, you need to lodge an FBT return. Lodging an
FBT return will allow us to update our records and refund the FBT instalment
credits you paid during the FBT year to you.

Difficulty paying your FBT

If you are having difficulty making a payment, phone us on 13 11 42 before the due
date to discuss your circumstances.

See also:

How to lodge your FBT return

FBT - how to complete your activity statement labels

How to lodge your FBT return

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/How-to-lodge-your-FBT-return/
Last modified: 12 May 2021
QC 43880
You must assess your liability for fringe benefits tax (FBT) annually. The FBT year
runs from 1 April to 31 March.

Find out about:

When to lodge and pay

How to lodge your FBT return
2021 FBT return and instructions
Prior years
If you've made a mistake

When to lodge and pay

If you have an FBT liability – also known as a fringe benefits taxable amount – you

54 of 66
must lodge a return and pay the FBT amount you owe for the FBT year.

If you prepare your own 2021 FBT return, you can lodge up until 25 June 2021
without incurring a failure to lodge on time penalty.

You must still pay your FBT liability by 21 May 2021. General interest charge will
apply to payments made after 21 May 2021.

Lodgment and payment dates may differ if a tax agent prepares your FBT return.
Tax agents will need to meet the lodgment program requirements for FBT.

If the due date falls on a weekend or public holiday, you can lodge and pay on the
next business day.

If you haven’t paid FBT before, or if the amount of FBT you had to pay for the
previous year was less than $3,000, you only make one payment for the year.

If your organisation had to pay $3,000 or more in the previous year, you must pay
your FBT in quarterly instalments for the next FBT year. You pay these through
your quarterly activity statement. If you need to make a balancing payment, the due
date is 21 May.

If you didn't have an FBT liability for an FBT year, and you didn't vary your FBT
instalments to nil during that year, you will need to lodge an FBT return. This will
allow us to update our records and refund any FBT instalment credits you paid
during the FBT year.

If you’re worried you’ll have difficulty paying on time, phone us on 13 11 42.

Extension of time to lodge

If you need an extension of time to lodge and you are:

lodging through a tax agent – contact them

not lodging through a tax agent – phone us on 13 28 66.
When you don’t need to lodge an FBT return
You don’t need to lodge if you didn't have an FBT liability for the FBT year and you
don’t pay your liability by instalments.

Instead you must complete a Fringe benefits tax – notice of non-lodgment

(NAT 3094). Lodge this by the time your return would normally be due.

How to lodge your FBT return

Most lodgments are processed within:

electronic – two weeks

paper – 10 weeks.
You can lodge your FBT return either:

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 electronically using Standard Business Reporting (SBR)-enabled software
through your tax agent
by post – send your completed FBT return to
Australian Taxation Office
GPO Box 9845
[insert the name and postcode of your capital city]

For example:

Australian Taxation Office

GPO Box 9845
SYDNEY NSW 2001

Table 1: Postcodes for each capital city

Capital city Postcode

Adelaide, South Australia 5001

Brisbane, Queensland 4001

Canberra, Australian Capital Territory 2601

Darwin, Northern Territory 0801

Hobart, Tasmania 7001

Melbourne, Victoria 3001

Perth, Western Australia 6001

Sydney, New South Wales 2001

2021 FBT return and instructions

For 2021, you can download and print the FBT return. The accompanying
instructions are available online only.

Next steps:

2021 Fringe benefits tax (FBT) return

2021 Fringe benefits tax return instructions
Alternatively, use the publication ordering service to order a paper copy of the
Fringe benefits tax (FBT) return 2021 (NAT 1067).

The 2021 instructions are not available in print or as a downloadable PDF

document.

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Prior years
Prior year forms and instructions are available at:

2020 Fringe benefits tax (FBT) return

2020 Fringe benefits tax return instructions
Prior year FBT returns and accompanying instructions
Use the publication ordering service to order a paper copy of the FBT return from
the 2016 year (NAT 1067).

If you've made a mistake

To amend an FBT return, see:

Fringe benefits tax returns

See also:

FBT concessions

Issues that attract our attention

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Reporting,-lodging-
and-paying-FBT/Issues-that-attract-our-attention/
Last modified: 10 Mar 2021
QC 65014
We publish key information on what attracts our attention to help you get your fringe
benefits tax obligations right.

Some FBT issues we look out for are:

Motor vehicles
Employee contributions
Entertainment
Car parking valuation

Motor vehicles
We look out for situations where an employer provides a motor vehicle to an
employee who uses it for private travel or has it available to use privately.

Both the actual private use of a motor vehicle and its availability for private travel
are fringe benefits. This means the employer may have a fringe benefits tax liability.

Situations that concern us include when employers:

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 fail to identify or report these fringe benefits
incorrectly apply exemption provisions
for vehicles that are not eligible
by treating all travel as business

incorrectly claim reductions for these benefits without the appropriate records
to support the reduction.
See also:

Chapter 7 – Car fringe benefits

Fringe benefits tax – car calculator
Chapter 18 – Residual fringe benefits (refer to section 18.6 Taxable value of
motor vehicles other than cars)
Fringe benefits tax – exempt motor vehicles
Chapter 4 – Fringe benefits tax record keeping

Employee contributions
The general effect of an employee contribution to benefits is that it:

reduces the amount of fringe benefits tax payable

is included in the employer's income.
We look out for discrepancies between the amount reported as an employee
contribution on the fringe benefits tax return and the income amounts on the
employer's tax return.

See also:

Reducing your FBT liability

Chapter 2 – Calculating fringe benefits tax

Entertainment
If you provide your employees or their associates with food and drink, gifts or leisure
activities, such as Christmas parties and business lunches, you may have a fringe
benefits tax liability.

We look out for situations where employers are providing entertainment activities to
their employees and the expenses are:

claimed as deductions in their tax return without correctly reporting and paying
fringe benefits tax
classified as sponsorship or advertising where there is an entertainment
aspect to the activity.
See also:

Chapter 14 – Entertainment
Chapter 20 – Fringe benefits tax exempt benefits

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Car parking valuation
You must obtain a valuation report to support the calculation of car parking fringe
benefits from a suitably qualified valuer and substantiate the market valuation.

We are aware that COVID-19 has affected the rates of commercial parking in many
areas, and that market valuations may be impacted as a result.

For car parking generally, situations that concern us include when the calculation is
based on:

nil market valuations or market valuations that appear to be significantly

discounted
parking rates that are not representative of commercial parking in the area
parking rates that are not supported by evidence.
See also:

Chapter 16 – Car parking fringe benefits

FBT exemptions and concessions

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/
Last modified: 26 Aug 2020
QC 43887
Some benefits are exempt from fringe benefits tax (FBT) or receive concessional
treatment (for example, living-away-from-home allowances). Specific exemptions
and concessions apply to some not-for-profit organisations.

Find out about:

Work-related items exempt from FBT

Minor benefits exemption
Taxi travel expenses exemption
Concessions, including concessions for not-for-profits
Small business and other car parking exemptions
Living away from home allowance fringe benefits
Emergency assistance
See also:

FBT – a guide for employers: Chapter 6 – Non-profit organisations and FBT

FBT – a guide for employers: Chapter 19 – Reductions in fringe benefit taxable
value

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 FBT – a guide for employers: Chapter 20 – Fringe benefits tax exempt benefits
COVID-19 and Fringe benefits tax

Work-related items exempt from FBT

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/Work-related-items-exempt-from-FBT/
Last modified: 29 Mar 2019
QC 43869
Subject to the limitations below, the following work-related items are exempt from
fringe benefits tax (FBT):

portable electronic devices such as mobile phones, laptops, tablets, portable

printers and GPS navigation receivers
computer software
protective clothing
briefcases
tools of trade.
The FBT exemption is limited to:

items primarily for use in the employee's employment

one item per FBT year for those that have a substantially identical function,
unless it is a replacement item – except that small businesses can provide
employees with more than one work-related portable electronic device in an
FBT year – even if the devices have substantially identical functions.
See also:

FBT for small business – Fringe benefits tax – exemptions and concessions
Am I eligible for the small business tax concessions?

Minor benefits exemption

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/Minor-benefits-exemption/
Last modified: 29 Mar 2019
QC 43888
A minor benefit is exempt from FBT where it is both:

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 less than $300 in notional taxable value (that is, the value if it was taxable),
and
unreasonable to be treated as a fringe benefit.

When the exemption doesn't apply

Generally, the minor benefits exemption doesn't extend to such benefits as:

in-house fringe benefits (see FBT – a guide for employers: Chapter 19 –

Reductions in fringe benefit taxable value – 15.9 Other reductions, In-house
fringe benefits – tax-free threshold)
minor entertainment benefits provided to employees of income tax-exempt
organisations
meal entertainment where you elect to use the meal entertainment provisions
and calculate the taxable value under the 50:50 split method (see Calculating
the taxable value of entertainment)
benefits provided under a salary sacrifice arrangement.

When the exemption applies

Notional taxable value
A notional taxable value is the value of the benefit if it was taxable. The notional
taxable value must be less than $300 for the minor benefits exemption to apply.

When you provide an employee with separate benefits that are connected with each
other (for example, a meal, a night’s accommodation and taxi travel) you need to
look at each individual benefit provided to the employee to see if the notional
taxable value of each benefit is less than $300.

When determining if the notional taxable value of the benefit is less than $300,
benefits provided to associates are not included.

Special rules that apply to car benefits

There are different rules for car benefits. The notional taxable value of a car benefit
is determined by either:

apportioning the operating costs of the vehicle, or

applying the cents-per-kilometre method.
Unreasonable to treat the benefit as a fringe benefit
If the notional taxable value of a benefit is less than $300, you then need to
determine if it would be unreasonable to treat the benefit as a fringe benefit. In
doing this you need to look at the nature of the benefit provided and consider the
following five criteria:

The frequency and regularity of the minor benefit – the more frequently and
regularly the benefit is provided, the less likely that the benefit will qualify as an
exempt benefit.

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 The total of the notional taxable values of the minor benefit and identical or
similar benefits – the greater the total value of minor benefits, the less likely it
is to qualify as an exempt benefit.
The likely total of the notional taxable values of other associated benefits –
that is, those provided in connection with the minor benefit.
For example, when a meal that is a minor benefit is provided in
connection with a night’s accommodation and taxi travel, which
themselves may or may not be a minor benefit, the total of their taxable
values must be considered. The greater the total value of other
associated benefits, in this case being the accommodation and the taxi
travel, the less likely it is that the minor benefit will qualify as an exempt
benefit.

The practical difficulty in determining what would be the notional taxable value
of the minor benefit – this includes consideration of the difficulty for you in
keeping the necessary records in relation to the benefit.
The circumstances in which the minor benefit and any associated benefits
were provided – this includes considering whether the benefit was provided as
a result of an unexpected event or whether it could be considered principally
as remuneration.
See also:

FBT – a guide for employers: Chapter 20 – Fringe benefits tax exempt benefits
–see 20.8 Other exemptions
FBT and entertainment for non-profit organisations

Taxi travel expenses exemption

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/Taxi-travel-expenses-exemption/
Last modified: 24 Jun 2020
QC 43889
Any benefit arising from taxi travel by an employee is exempt from fringe benefits tax
(FBT) if the travel is a single trip beginning or ending at the employee's place of
work.

On or after 1 April 2019, in addition to licenced taxi travel, the exemption applies to
travel that you provide to your employees in vehicles involving the transport of
passengers for a fare (other than in a limousine), such as ride-sourcing travel.

Any benefit arising from taxi travel by an employee is also an exempt benefit if both
of the following apply:

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 the travel is a result of sickness of, or injury to, the employee
the whole or a part of the journey is directly between any of the following
the employee's place of work
the employee's place of residence
any other place that it is necessary, or appropriate, for the employee to go
as a result of the sickness or injury.

Concessions, including concessions for not-

for-profits
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/Concessions,-including-concessions-for-not-for-profits/
Last modified: 20 Feb 2020
QC 43892
Concessions apply to some fringe benefits. The concessions reduce the taxable
value of the fringe benefit, resulting in a reduction in the amount of fringe benefits
tax (FBT), or even no FBT, being payable.

A reduction in the taxable value of the fringe benefit applies to:

some benefits provided in remote areas

some travel provided to employees posted overseas
reimbursement of costs incurred by employees using their own car for
relocation
some other benefits.
See also:

FBT – a guide for employers: Chapter 19 – Reductions in fringe benefit taxable

value

Not-for-profit organisation concessions

Specific concessions apply to some not-for-profit organisations, including:

eligible charities, such as

charitable institutions
public benevolent institutions
health promotion charities
religious institutions

public and not-for-profit hospitals and public ambulance services.

Some not-for-profit organisations are required to be registered with the Australian
Charities and Not-for-profits Commission (ACNC) and endorsed by us to access

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concessions.

See also:

FBT – a guide for employers: Chapter 6 – Not-for-profit organisations and

fringe benefits tax

Emergency assistance
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-exemptions-
and-concessions/Emergency-assistance/
Last modified: 28 Jan 2020
QC 61270
Certain benefits you provide to your employees or their associates in an emergency
situation are exempt from fringe benefits tax (FBT). The exemption applies to
benefits you provide to those who are impacted or potentially impacted in:

a natural disaster
an accident
a serious illness
an armed conflict
a civil disturbance.

Types of emergency assistance

Emergency assistance you provide to employees is exempt from FBT when it is:

first aid or other emergency health care

emergency
meals
food supplies
clothing
accommodation
transport
household goods
temporary repairs
any similar assistance.
Health care requirements
There are specific requirements when it comes to providing health care. The
exemption only applies to health care treatment provided:

by an employee of yours (or related company)

on your premises (or premises of a related company)

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 by a company doctor at an accident site
at or near an employee's worksite
The exemption does not apply when you pay for your employee's ongoing medical
or hospital bills.

Long-term benefits
Although benefits you provide to an employee such as temporary repairs to damage
caused to a home during an emergency event are exempt from FBT, long-term
benefits such as a new house or a replacement car to replace those destroyed as a
result of an emergency are not exempt.

Assistance for you and your business

If you or your business is affected by a disaster, phone our Emergency support
infoline on 1800 806 218, to help you get your tax back on track when the
immediate emergency has passed.

See also:

Fringe benefits tax - a guide for employers - Chapter 20 - Fringe benefits tax
exempt benefits (see 'Emergency assistance' under 20.8 Other exemptions)
Dealing with disasters

FBT Webinars
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/FBT-Webinars/
Last modified: 13 Dec 2018
QC 53971

Webinar: NFP and government and FBT – what happens

when you provide entertainment

Media: [video title]

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiunfghtpw (Duration: 45:13)

Webinar: FBT – eat, drink and be merry

Media: [video title]

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiunya3by1 (Duration: 56:59)

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Webinar: FBT tips and what attracts our attention

Media: [video title]

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiub6w5qm3 (Duration: 1:03:51)

Note: This webinar does not cover basic information. Therefore it's recommended
that those who watch it have prior knowledge of FBT.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand
your rights and entitlements and meet your obligations.
If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as
a result, we will take that into account when determining what action, if any, we should take.
Some of the information on this website applies to a specific financial year. This is clearly marked. Make
sure you have the information for the right year before making decisions based on that information.
If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to
you, contact us or seek professional advice.

Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way
that suggests the ATO or the Commonwealth endorses you or any of your services or products).

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