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  • How does FBT work for government employers

    Who pays the FBT?

    FBT is paid by the employer where, in the case of government, the organisation, department or authority. Who pays the FBT can vary across different levels of government and may differ from the relevant entity for pay as you go (PAYG) or goods and services tax (GST) purposes.

    Commonwealth

    Each Commonwealth department is treated as a separate employer under the FBT legislation. FBT is imposed at the departmental level and not the Commonwealth level.

    State and territory governments

    State and territory governments can devolve the administration and payment of FBT to a departmental level. States and territories may nominate only certain bodies for treatment as employers under the FBT legislation.

    See also:

    Local government

    Each local government council is treated as a separate employer for FBT purposes.

    Who is an associate?

    A fringe benefit arises where an employer, or an associate of the employer:

    • agrees to a third party providing benefits to their employees or their associates
    • participates, facilitates or promotes the provision or receipt of a benefit provided by a third party.

    Table of relationships between government and departments

    Level of Government

    Who is an associate

    Examples

    Who is not an associate?

    Federal

    • Departments of the Commonwealth are associates of each other.
    • Authorities of the Commonwealth are associates of each other.

     

    Federal government departments are associates.

    • State government departments and authorities.
    • Territory government departments and authorities.

     

    State (no devolvement of FBT)

    • A state is an associate of each of its authorities.
    • Authorities of the state are associates of each other.

     

    State governments are associates.

    • Commonwealth government departments and authorities.
    • Territory government departments and authorities.

     

    State (devolvement of FBT)

    • Other nominated state bodies.
    • The relevant state.
    • Any other authority of the state.

     

    Nominated state government departments are associates.

    • Commonwealth government departments and authorities.
    • Territory government departments and authorities.

     

    Territory (no devolvement of FBT)

    • A territory is an associate of each of its authorities.
    • Authorities of a territory are associates of each other.

     

    territory governments are associates.

    • Commonwealth government departments and authorities.
    • State government departments and authorities.

     

    Territory (devolvement of FBT)

    • Other nominated territory bodies of the relevant territory.
    • The relevant territory.
    • Any other authority of the territory.

     

    Nominated territory departments are associates.

    • Commonwealth government departments and authorities.
    • State government departments and authorities.

     

    Determining the FBT status

    Entitlement to some FBT concessions will depend on the government organisation's income tax status. A government organisation will be:

    • income tax-exempt
    • income tax-exempt but pay income tax equivalents
    • subject to income tax.

    Most Australian government organisations are income tax-exempt.

    The functions of a government organisation also determine eligibility to some FBT concessions, for example, if the entity is a public hospital or a public ambulance service.

    Australian Government organisations like an Australian Government department, executive agency, statutory agency or an authority of the Commonwealth are not charitable institutions or public benevolent institutions, so are not eligible for a FBT rebate.

    See also:

      Last modified: 20 Dec 2017QC 19918