This section provides an overview of each type of fringe benefit and will help you to complete item 23:
- A – Cars using the statutory formula
- B – Cars using the operating cost method
- C – Loans granted
- D – Debt waiver
- E – Expense payments
- F – Housing – units of accommodation provided
- G – Employees receiving living-away-from-home-allowance
- J – Board
- K – Property
- L – Income tax exempt body – entertainment
- M – Other benefits (residual)
- N – Car parking
- P – Meal entertainment
Make sure that you do not include the gross-up calculation in the amounts you show at this item.
There are specific valuation rules for each fringe benefit category. Before you can calculate the taxable value of any benefit and complete the details in the 'Taxable value of benefits' column, you must identify the category of the benefit you provided and do the appropriate calculations for that category.
See also:
- Refer to Fringe benefits tax – a guide for employers for more information.
A – Cars using the statutory formula
A car fringe benefit most commonly arises where you make a car you 'hold' available for the private use of an employee.
You can calculate the taxable value of a car fringe benefit using either the statutory formula method or operating cost method.
When you complete the information at item A, do not show the actual value of the cars in the 'Gross taxable value (a)' column.
Employee contributions include:
- amounts the employee pays directly to you for using a car
- any car operating costs (for example, fuel) the employee paid.
Use GST-inclusive amounts where appropriate.
Determining the statutory percentage
You can reduce the base value of a car by one-third for the year ending 31 March 2018, if you owned or leased the car in the year ending 31 March 2013. The reduction applies only once for a particular car and you then use the reduced base value for subsequent years.
A flat statutory rate of 20% applies, regardless of the distance travelled, to all car fringe benefits you provide from 1 April 2014 (except where there is a pre-existing commitment in place before 7.30pm AEST on 10 May 2011 to provide a car).
The statutory percentages for car fringe benefits provided where you have a pre-existing commitment in place before 7.30pm AEST on 10 May 2011 to provide the car after this time, are available in Chapter 7.4 of Fringe benefits tax – a guide for employers.
Example 9: Taxable value of car fringe benefits using the statutory formula – pre-existing commitment
You have two cars with a reduced base value of $30,000 each. You enter into a contract with your employees on 1 May 2011 to provide cars to them for seven years. Both cars travelled 30,000 kilometres in the year ending 31 March 2018 and have been available to your employees for their private use for the whole year. Your employees who use the cars have made contributions of $1,000 each for fuel during the year.
The transitional rate based on the kilometres travelled is 11%.
The calculation of the taxable value using the statutory formula for each car is:
- ($30,000 × 11%) − $1,000
= $2,300.
You would write at item 23:
Example 10: Taxable value of car fringe benefits using the statutory formula – no pre-existing commitment
On 12 June 2017 you agreed to provide an employee with a car fringe benefit. The car was delivered on 1 July 2017 and was available to the employee for private use from that date.
The base value of the car is $32,000.
The employee did not make any contributions.
The calculation of the taxable value using the statutory method is:
- ($32,000 × 20%) × (274 ÷ 365) = $4,804.
You would write at item 23:
B – Cars using the operating cost method
Use GST-inclusive amounts where appropriate – do not show the actual value of the cars in the 'Gross taxable value (a)' column.
Employee contributions include:
- amounts the employee pays directly to you for using a car
- any car operating costs (for example, fuel) the employee has paid.
The total operating costs you use for calculating the fringe benefits taxable value of car fringe benefits are different from those you use for income tax purposes. Also, the income tax depreciation cost limit does not apply for FBT purposes.
Example 11: Taxable value of car fringe benefits using the operating cost method
You have a car with $10,000 in total operating costs for the year ending 31 March 2018. The employee who uses the car maintains a logbook. Based on the logbook and other usage patterns, you estimate the percentage of private use to be 30%. The employee has not made any contributions during the year.
The calculation of the taxable value for the car using the operating cost method is:
- ($10,000 × 30%) = $3,000.
You would write at item 23:
C – Loans granted
A loan fringe benefit arises where you provide a loan to an employee and charge a low rate of interest (or no interest). Item C is the number of loans you made that gave rise to taxable fringe benefits and the taxable value of those benefits.
Therefore, do not show the amount of the actual loans in the 'Gross taxable value (a)' column.
Example 12: Taxable value of loan fringe benefits
You are a retail business and lend an employee $20,000. You did not charge interest and the employee made no repayments during the FBT year.
The calculation based on the statutory (or benchmark) interest rate that applies from 1 April 2017 is:
- $20,000 × 5.25% = $1,050.
You would write at item 23:
D – Debt waiver
If an employee is in debt to you and you release the employee from the obligation to repay the debt, the unpaid amount is a debt waiver fringe benefit. Show the amount of this kind of benefit at item D.
A debt owed by an employee that you write off as a genuine bad debt is not a debt waiver fringe benefit.
Example 13: Taxable value of debt waiver fringe benefit
You waive a $500 debt (including principal and interest) that an employee owed you from a previous year.
You would write at item 23:
E – Expense payments
An expense payment fringe benefit may arise in either of two ways:
- where you (the employer) reimburse an employee for expenses they incur
- where you pay a third party in satisfaction of expenses incurred by an employee.
Example 14: Taxable value of expense payment fringe benefits
You operate a real estate business and pay an employee's home telephone bill of $1,200 for the year ending 31 March 2018. On 31 March 2018, your employee provides you with a declaration stating that 60% of the bills are for business purposes and are, as a result, otherwise deductible. The other 40% of the calls are private calls.
The calculation of the taxable value for the expense payment is:
- $1,200 × 60% = $720. $720 is otherwise deductible
- $1,200 – $720 = $480 taxable value.
You would write at item 23:
F – Housing – units of accommodation provided
A housing fringe benefit arises where an employee is provided with the right to use a unit of accommodation and a lease or licence which grants that right exists at a time when that unit of accommodation is the usual place of residence of the employee.
Housing benefits provided in a remote area may be exempt benefits. Other accommodation that does not meet the requirements of a housing fringe benefit is included as a residual fringe benefit and you must show it at item M 'Other benefits (residual)'.
Example 15: Taxable value of housing fringe benefits
You manufacture chocolate and provide a flat in Sydney CBD to your employee for the year ending 31 March 2018. The flat is the employee's usual place of residence for the whole year.
The market rental value for the year is $26,000 (52 weeks at $500). The employee pays you a nominal rent of $2,600 for the year ($50 per week).
The calculation of the taxable value is:
- $26,000 – $2,600 = $23,400.
You would write at item 23:
G – Employees receiving living-away-from-home allowance (show total paid including exempt components)
A living-away-from-home-allowance is an allowance you pay to your employee to compensate for additional expenses incurred and any disadvantages suffered because the employee's duties of employment require them to live away from their normal residence.
Write at item G the amount of benefits you provide to employees as a living-away-from-home allowance, including the exempt accommodation, exempt food components and the statutory food amount.
The statutory food amount is the amount your employees would spend on food at their normal residence – it is set at $42 per week per adult, and $21 per week per child under 12 years of age.
Write the exempt accommodation and exempt food component amounts in the 'Value of reductions (c)' column, provided you have obtained the relevant declarations.
See also:
You must obtain the necessary documentary evidence or declaration of employee expenses and the declaration about living away from home so you can take advantage of any exempt accommodation and exempt food components.
See also:
Example 16: Taxable value of living-away-from-home allowance fringe benefits
Your employee, lives away from home in Australia for the year ending 31 March 2018 and receives $591 per week ($30,732 for the year) as a living-away-from-home allowance. The duties of your employee's employment require the employee to live away from their normal residence.
This is made up of:
- $350 per week ($18,200 for the FBT year) for accommodation
- $241 per week ($12,532 for the FBT year) for food.
The accommodation component reflects what the employee could reasonably be expected to pay for rent, and the food component relates to the total estimated food expenditure of $241 per week. Your employee provides you with the required documentary evidence showing that they spent at least $350 per week on accommodation. The employee declares that they have spent no more than the Commissioner of Taxation's reasonable food amount and, therefore, is not required to substantiate their expenditure. The employee provides you with a living away from home declaration – employee who maintains an Australian home – on 20 April 2018.
The employee started living away from home at this location in January 2017. Due to the 12-month rule, you are entitled to reduce the taxable value of the allowance for the first 40 weeks of the year starting on 1 April 2017. The employee maintains a home in Australia at which they usually reside and it is available for their use during the year.
The calculation of the taxable value for living-away-from-home allowance fringe benefits is:
- Exempt accommodation component = $14,000 (40 weeks at $350 per week)
- Exempt food component = $7,960 (that is, $9,640 − $1,680) [40 weeks at $199 ($241 paid less $42 per week statutory food amount)]
- Taxable value = $30,732 – $14,000 (exempt accommodation) – $7,960 (exempt food) = $8,772
- Value of reduction is the total of the exempt accommodation and the exempt food components = $21,960 (that is, $14,000 + $7,960).
You would write at item 23:
J – Board
Meals you provide to an employee and to family members living with the employee may be a board fringe benefit if:
- you provide an employee with accommodation
- the employee has an entitlement to at least two meals a day prepared and supplied by you on your premises.
Example 17: Taxable value of board fringe benefits
You provide board fringe benefits valued at $21,900 to employees for the year ending 31 March 2018. You do not require your employees to make a contribution towards their board meals and their accommodation. The employees would not have been entitled to an income tax deduction had they paid for their meals.
You would write at item 23:
K – Property
You may provide a property fringe benefit when you provide an employee with property (for example, goods), either free or at a discount.
Example 18: Taxable value of property fringe benefits
You are an electrical retailer that provides a television that you sell to the public for $2,000, and an air conditioner that you sell to the public for $1,600, to an employee during the year ending 31 March 2018. These prices are the lowest selling price including GST. Your employee paid a total of $300 for these items and did not enter into a salary packaged arrangement to pay for the goods.
As these items are in-house property fringe benefits, and are not provided under a salary packaging arrangement, the taxable value is 75% of the normal selling price. Additionally, you qualify for the in-house concession of up to $1,000 per employee per year. The goods are not used for work-related purposes.
The calculation of the taxable value of the property fringe benefit is:
- Gross taxable value is $2,700 [($2,000 + $1,600) × 75%]
Value of reduction is $1,000.
You would write at item 23:
L – Income tax exempt body – entertainment
A tax-exempt body entertainment fringe benefit may arise from entertainment expenses incurred by you if either:
- you are wholly or partially exempt from income tax
- you did not derive assessable income from the activities to which the entertainment relates.
Not for profit employers, who are eligible for the FBT capping exemption or FBT rebate, do not need to disclose meal and entertainment facility leasing expense benefits not provided under a salary packaging arrangement at item 23 on the FBT return.
If you provide the entertainment under a salary packaging arrangement, you cannot choose to value it as a meal entertainment fringe benefit.
If you are not exempt from income tax and you provided entertainment, this may give rise to a fringe benefit.
Do not value a benefit of this type in this category – instead, establish the taxable value as an expense payment, property or residual fringe benefit, depending on how you provided the benefit. Alternatively, you can value meal entertainment as a meal entertainment fringe benefit
Example 19: Taxable value of income tax exempt body – entertainment fringe benefits
You are a local council that provides a Christmas function for your employees on your premises. You provided finger food and your employees' spouses attended. You did not elect to value the meal as a meal entertainment fringe benefit.
The value of the tax-exempt body entertainment fringe benefit is $5,000.
You would write at item 23:
M – Other benefits (residual)
You may provide a residual fringe benefit when you provide an employee with either of the following:
- any right, privilege, service or facility
- any other benefit that is not one of the specific categories of fringe benefits included at other categories in item 23.
If you choose to value entertainment facility leasing expense benefits that are not provided under a salary packaging arrangement under the 50–50 method, you must write the value of these benefits at item M.
Example 20: Taxable value of other benefits (residual fringe benefits)
You run a construction business and own a one-tonne utility with $8,000 in total operating costs for the year ending 31 March 2018. Your employee uses the utility for both business and private purposes. On 1 May 2018 your employee provides you with a declaration stating that they used the utility 25% of the time for private purposes. Your employee has not made any contributions during the year towards the use of the utility.
The calculation of the taxable value for the utility is:
- ($8,000 × 25%) – $0 = $2,000.
Value of reduction is $8,000 × 75% = $6,000 (business usage).
You would write at item 23:
N – Car parking
A car parking fringe benefit may arise for each day on which you provide a car parking space for use by an employee.
See also:
Example 21: Taxable value of car parking fringe benefits
You have 10 parking spaces under your city building that you allowed your employees to use during the year ending 31 March 2018.
Your employees use the parking spaces for more than four hours during the working day and there are several commercial parking stations within walking distance that charge more than $10 a day on 1 April 2017.
The car parking fringe benefits are valued at $20,000. Your employees have not made any contributions during the year.
You would write at item 23:
P – Meal entertainment
Where expense payment fringe benefits, property fringe benefits, residual fringe benefits or tax-exempt body entertainment fringe benefits arise from the provision of meal entertainment, you may be eligible to elect to classify these fringe benefits as meal entertainment fringe benefits. You are not eligible to make an election if benefits are provided under salary packaging arrangements on or after 1 April 2017.
If you choose to classify a fringe benefit as a meal entertainment fringe benefit, you have to classify all fringe benefits arising from the provision of meal entertainment during the year ending 31 March 2018 as meal entertainment fringe benefits.
Specifically, the provision of meal entertainment means:
- providing entertainment by way of food or drink
- providing accommodation or travel in connection with, or to facilitate the provision of, such entertainment
- paying or reimbursing expenses incurred by the employee for the above.
There are two methods you can use to calculate the taxable value of meal entertainment fringe benefits:
- 50–50 split method
- 12-week register method.
You must decide to classify fringe benefits as meal entertainment by 21 May 2018 unless we have allowed you to lodge it later or you have a later due date.
Not for profit employers, who are eligible for the FBT capping exemption or FBT rebate, do not need to disclose meal and entertainment facility leasing expense benefits not provided under a salary packaging arrangement at item 23 on the FBT return.
Example 22: Taxable value of meal entertainment fringe benefits
You spend $4,000 on meal entertainment not provided under a salary packaged arrangement for the year ending 31 March 2018. You elect on 1 April 2018 to value the meal entertainment fringe benefits using the 50–50 split method.
The calculation of the taxable value for the meal entertainment fringe benefits is:
- $4,000 × 50% = $2,000.
You would write at item 23: