• Minor benefits exemption

    Minor benefits are exempt benefits. A minor benefit is both:

    • less than $300 in notional taxable value, and
    • unreasonable to treat as a fringe benefit.

    A notional taxable value is the value of the benefit if it was taxable.

    Where you provide an employee with separate benefits that are in connection 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 either:

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

    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.

    Determining whether it would be unreasonable to treat the minor benefit as a fringe benefit

    In determining if the minor benefit exemption applies, you need to examine the nature of the benefit provided and consider each of the various criteria – value, frequency and regularity of provision, and recording and valuation difficulties – before concluding whether the exemption should apply to a minor benefit.

    Consider the following five criteria when deciding if it would be unreasonable to treat the minor benefit as a fringe benefit:

    1

    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.

    2

    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 the minor benefit will qualify as an exempt benefit.

    3

    The likely total of the notional taxable values of other associated benefits – that is, those provided in connection with the minor benefit. For example, where a meal, which 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.

    4

    The practical difficulty in determining what would be the notional taxable value of the minor benefit. This would include consideration of the difficulty for you in keeping the necessary records in relation to the benefits.

    5

    The circumstances in which the minor benefit and any associated benefits were provided. This would include consideration as to whether the benefit was provided as a result of an unexpected event, and whether or not it could be considered principally as being in the nature of remuneration.

    When the minor benefits exemption doesn't apply

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

    • in-house fringe benefits
    • 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
    • benefits provided under a salary sacrifice arrangement.

    Next steps:

    See also:

    Last modified: 23 Jan 2015QC 43888