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Minor benefits exemption

Work out if you can apply the minor benefits exemption to a benefit.

Last updated 11 January 2023

When the exemption applies

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

Notional taxable value less than $300

The 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 benefit exemption to apply.

When you provide an employee with separate benefits that are connected with each other (such as a meal, a night’s accommodation and taxi travel), the $300 threshold applies separately to each benefit.

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

Car benefits

The notional taxable value of a car benefit is determined by either:

  • apportioning the operating costs of the vehicle
  • applying the cents-per-kilometre method.

Unreasonable to treat the benefit as a fringe benefit

A benefit with a notional taxable value of less than $300 is exempt if it would be unreasonable to treat the benefit as a fringe benefit.

To determine this, you need to look at the nature of the benefit and consider the following criteria:

  • The frequency and regularity of the minor benefit – the more frequently and regularly the benefit is provided, the less likely it will qualify as an exempt benefit.
  • 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 they are to qualify as exempt benefits.
  • 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 in determining if it is unreasonable to treat the benefit as a fringe benefit. The greater the total value of other associated benefits, the less likely it is that the minor benefit will qualify as an exempt benefit.
     
  • The practical difficulty in determining the notional taxable value of the minor benefit – this includes consideration of the difficulty for you in keeping the necessary records for 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.
Start of example

Example: unreasonable to treat small gift as a fringe benefit

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 criteria above, it would be unreasonable to treat the chocolates and flowers as a fringe benefit.

End of example

 

Start of example

Example: minor benefit not exempt as it is provided frequently and regularly

Every Friday, Angela takes her 2 employees to a local hotel for lunch. The lunch for each employee usually consists of a main course and a couple of drinks, and costs on average $45.

This is not an exempt minor benefit. Even though the value of the Friday lunch is only $45, the lunch is provided regularly and the total value of the similar benefits (the weekly lunches) is high. Therefore it is reasonable to treat the lunches as a fringe benefit.

End of example

When the exemption doesn't apply

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

For more information and detailed examples of minor benefits, see:

QC71159