ato logo

How FBT operates for government employers

Determine your organisation's FBT status, who pays FBT and who is an associate of your organisation.

Last updated 11 January 2023

Your organisation's FBT obligations and exemptions

Government organisations are generally liable to pay fringe benefits tax (FBT) on benefits they provide to their employees.

Government organisations are not eligible for FBT exemptions or rebates available to not-for-profit organisations, except for public hospitals and ambulance services, which are exempt up to a capping threshold.

As most government organisations are income tax exempt, they are subject to the rules for tax-exempt body entertainment fringe benefits.

To make further enquiries for your government organisation, phone us on 13 28 66.

Who pays FBT for government?

Responsibility for paying FBT varies across different levels of government. FBT may not be paid by the same entity that pays an organisation's pay as you go (PAYG) withholding or goods and services tax (GST).

Australian (federal) Government

Each Australian Government department or agency is treated as a separate employer under FBT legislation. FBT is imposed at the departmental or agency level, not at the whole-of-government level.

State and territory governments

State and territory governments can devolve the administration and payment of FBT to the departmental level.

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 in, facilitates or promotes the provision or receipt of a benefit provided by a third party.
Government employers and their associates

Level of Government

Who is an associate

Australian (federal)

  • Australian Government departments are associates of each other.
  • Australian Government authorities are associates of each other.
 

State (no devolvement of FBT)

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

State (devolvement of FBT)

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

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 (devolvement of FBT)

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

Who is not an associate?

Australian, state and territory departments and authorities are not associates of departments or authorities of other levels of government. For example:

  • state government departments and authorities are not associates of territory government departments or authorities
  • Australian Government departments and authorities are not associates of state or territory government departments or authorities.

QC71185