Expense payment fringe benefits

Expense payment fringe benefits arise when an employer reimburses an employee for an expense incurred by the employee, or when the employer pays a third party for expenses incurred by an employee.

Listed below are a number of examples of expense payment fringe benefits provided by Australian Government entities that are not exempt from FBT:

  • Higher Education Contribution Scheme (HECS)-Higher Education Loan Program (HELP) payments
  • Postgraduate Education Loans Scheme (PELS) loan payments
  • reimbursement or payment of home telephone expenses used for private purposes
  • reimbursement or payment of home internet service fees used for private purposes
  • reimbursement for the purchase of a home-based desktop computer
  • payment or reimbursement of child care costs
  • reimbursement for school holiday care costs or where the employee is required to work on a weekend or over a holiday period
  • gym membership fees
  • registration fees for a sporting group
  • other health and fitness costs
  • provision of security services, for example, home security services for employees living overseas
  • spouse travel
  • car parking expense payment fringe benefits
  • reimbursement of costs of transferring the registration of a motor vehicle when an employee is required to live away from home or relocate in order to perform employment duties.

The following expense payment fringe benefits are commonly provided by Australian Government entities. These benefits may be exempt from FBT, have a reduced taxable value or be otherwise deductible. More detail on the requirements for exemption or reductions in taxable value can be found in Reductions in taxable value and Exempt benefits or in the FBTAA.

The benefits that may be exempt from FBT include:

  • payment or reimbursement for newspapers and periodicals used for business purposes
  • eligible work-related items, as defined in section 58X of the FBTAA
  • taxi travel to or from work or in the event of illness or injury
  • travel from a workplace located in a foreign country in order to obtain medical treatment
  • expense payment benefits valued at under $300 where it is unreasonable to treat the benefit as a fringe benefit
  • certain expenditure relating to an employee who is living-away-from-home or has relocated, including
    • accommodation while an employee is living-away-from-home to perform employment duties
    • certain costs in relation to the sale or acquisition of a dwelling as a result of relocation
    • connection or re-connection of certain utilities when an employee is living-away-from-home or has relocated
    • relocation transport
    • provision of a relocation consultant to help the employee settle in to a new location, per section 58AA of the FBTAA
    • reimbursement for costs of travelling to an alternate locality to research houses and schools, prior to the employee living-away-from-home or relocating in order to perform employment duties
    • reimbursement for customs duty incurred to move a car due to an employee having to relocate in order to perform employment duties
  • airport lounge membership fees
  • expense payment or reimbursement for long service awards which do not exceed the prescribed amounts
  • awards to recognise occupational health and safety achievements where such awards do not exceed a value of $200.

Customs duty reimbursements are covered by the exemption in subsection 58B(2) of the FBTAA provided the car is kept primarily for the personal use of family members.

End of attention

The benefits that may qualify for a reduced taxable value include:

  • overseas employment holiday transport
  • remote area entitlements, including reimbursement for car expenses on a cents per kilometre basis in relation to remote area holiday transport
  • full-time education of children of employees working overseas
  • reunion flights to reunite families of employees living overseas or in a remote area.

More detail in relation to the treatment of those expense payment fringe benefit items the ATO has identified as being frequently reported incorrectly is provided below.

    Last modified: 17 Jul 2012QC 21998