An expense payment fringe benefit may arise when an employee incurs an expense for their own benefit and you, as their employer:
- reimburse them for the expense, or
- directly pay a third party for the expense.
Expense payment fringe benefits only arise from expenses your employee incurs. Goods or services you provide to an employee, or pay for with your credit card, are not expense payment fringe benefits. In these cases the goods or services may be property or residual fringe benefits.
An expense payment fringe benefit may be for:
- a business or private expense, or a combination of both
- an expense incurred by the employee but not paid for by them
- an expense incurred by an associate of the employee, such as their partner or relative.
You can register for an Employer: Expense payment fringe benefits sessionExternal Link. This webinar will help you work out if you are providing expense payment fringe benefits and what you need to do.
Common expense payment fringe benefits
Expense payment fringe benefits include the reimbursement or payment of:
- car expenses, such as registration and insurance
- car parking (if you do not provide the car parking facilities)
- home mortgage expenses
- cost of acquiring a home/desktop computer
- home telephone and internet expenses
- employee personal credit card payments
- health insurance premiums
- self-education expenses.
You don't pay FBT if the expense payment is for an exempt benefit, such as a minor benefit, portable electronic device, protective clothing or tools of trade.
Exempt benefits differ from reductions and concessions you may be able to apply to the taxable value of an expense payment fringe benefit. If the benefit is exempt, you don't need to calculate its taxable value.
You need to:
- work out the taxable value of the expense payment fringe benefit
- calculate how much FBT to pay
- lodge your FBT return
- pay the FBT amount
- check if you should report the fringe benefit through Single Touch Payroll (or on your employee’s payment summary).
Generally, the taxable value of an expense payment fringe benefit is the amount you reimburse or pay.
For more information about the taxable value of common expense fringe benefits, see FBT guide: 9.9 Common expenses reimbursed or paid for by employers.
The taxable value of an expense payment fringe benefit is reduced (or eliminated entirely) if:
- your employee could have claimed the expense as an income tax deduction (this is called the otherwise deductible rule)
- you must get an employee declaration that states the extent to which the expense is deductible
- your employee incurred the expense to purchase goods or services from your business – see FBT guide: 9.3 In-house expense payment fringe benefits
- the benefit is eligible for a concession, such as for relocation expenses or living away from home expenses – see Exemptions, concessions and other ways to reduce FBT.