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  • Retraining and reskilling exemption

    Employers who provide training or education to employees who are redundant, or soon to be made redundant, may be exempt from fringe benefit tax (FBT).

    When the exemption applies

    Retraining and reskilling benefits are exempt from FBT where the:

    • employer provides a benefit in respect of training or education to a redundant, or soon to be redundant, employee
    • employer has complied with all obligations under the Fair Work Act 2009 that relate to the employee's redundancy, and
    • education or training that is provided is
      • not related to the employee's current job role, and
      • for the primary purpose of helping that employee gain new employment.

    The exemption includes employees being redeployed within your business or seeking employment elsewhere.

    The exemption covers the provision of education or training (such as reimbursing or paying the course fees or giving training) and also benefits associated with the education or training (such as related course materials, textbooks, travel and accommodation).

    There are no limits on the number of training or education courses an employee may undertake, or on the cost of the education or training.

    When an employee is 'redundant'

    For the purpose of this exemption, an employee is considered 'redundant when:

    • their employer no longer requires, or reasonably expects to require their job because of changes in the operational requirements of the employer’s business or undertaking. The employee's job will not be performed by anyone else in the business
    • they are no longer required in one part of your business but can be redeployed to another part of your (or your associate's) business.

    Employees are considered 'soon to be made redundant' when:

    • you reasonably expect the employee to be made redundant, but you have not yet acted upon this.

    When the exemption doesn't apply

    The exemption does not apply to education or training that:

    Certain employees are also excluded from the exemption, as outlined in the table below.

    The retraining and reskilling exemption does not apply if:

    The employer is

    And the employee is

    An individual

    • A relative of the employer

    A partnership

    • A relative of a partner in the partnership

    A company (other than a widely held company within the meaning of the Income Tax Assessment Act 1997)

    • A shareholder in, or a relative of a shareholder in, the company; or
    • A director of, or a relative of a director of, the company.

    A relative means:

    • their spouse
    • a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child, or a spouse of any of these individuals.

    Claiming the exemption

    The exemption can be applied to retraining and reskilling benefits provided on or after 2 October 2020.

    Retraining and reskilling benefits that are exempt from FBT are not included in your FBT return, or in your employee's reportable fringe benefits amount. If you’ve already lodged your 2021 FBT return and paid any FBT owing, you can amend your 2021 FBT return to reduce the FBT paid for retraining and reskilling that is exempt.

    You must keep a record of all training and education provided to redundant or soon to be made redundant employees if you intend on claiming the exemption. Your business records should also show that you meet the requirements for claiming the exemption.

    See also:

     

    Last modified: 30 Jun 2021QC 66131