• Is it an exempt benefit?

    If you provide only exempt benefits, you will not have to pay FBT. Some common exempt benefits are outlined below.

    Minor benefits exemption

    Some minor benefits you provide may be exempt from FBT. To determine whether the minor benefits exemption applies, you need to:

    Step

    Action

    1

    Determine whether the taxable value of the benefit is less than $300.

    If the taxable value:

    • is $300 or more, the minor benefits exemption does not apply, or
    • is less than $300, continue to step 2.

     

    2

    Determine whether it is unreasonable to treat the minor benefit as a fringe benefit.

    How do you decide whether the minor benefit exemption would apply?

    To determine whether it is unreasonable for a benefit to be treated as a fringe benefit, you need to look at five factors. None of the factors outlined below will determine if the benefit is an exempt minor benefit on its own. You need to look at all the factors.

    Factors to consider

    Explanation

    1

    How frequently and regularly benefits that are identical or similar to the minor benefit are provided.

    The more frequently and regularly identical or similar benefits are provided, the less likely it is that the benefit will be an exempt minor benefit.

    2

    The total of the values of the minor benefit and identical or similar benefits to the minor benefit.

    The greater the total of the value of the benefit and other identical or similar benefits, the less likely it is that the benefit will be an exempt minor benefit.

    3

    The likely total of the value of other associated benefits, that is, those provided in connection with the minor benefit.

    The greater the total of other associated benefits, the less likely it is that the minor benefit will be an exempt benefit.

    4

    The practical difficulty for you in determining the value of the minor benefit and any associated benefits.

    The more difficult it is for you to determine the value, the more likely it is that the benefit will be an exempt minor benefit and,

    The more difficult it is for you to keep the necessary records in relation to the benefit, the more likely it is that the benefit will be an exempt minor benefit.

    5

    The circumstances in which the benefit and any associated benefits were provided.

    If the benefit was provided as a result of an unexpected event, such as overtime, it is more likely to be an exempt minor benefit.

    If the benefit is mainly given to the employee as a reward for services (that is, it is remuneration), it is less likely to be an exempt minor benefit.

    Minor benefits exemption examples

    Example

    Minor benefits exemption applies

    Minor benefits exemption does not apply

    Kate sends chocolates and flowers to Jane, an employee, on the birth of her daughter. The chocolates and flowers have a taxable value of $105.

    X

    This is an exempt minor benefit because the chocolates have a taxable value of less than $300 and, looking at the five factors, it would be unreasonable to treat the chocolates and flowers as a fringe benefit.

     

    John provides his employee Steve with a year's membership, value $850, to his favourite football club.

     

    X

    This would not be an exempt minor benefit because the value of the membership is $300 or more.

    Every Friday Angela takes her 2 employees to a local hotel for lunch. The lunch for each employee usually consists of a main course and a couple of drinks and costs on average $45.

     

    X

    The value of the Friday lunch is only $45. However, looking at the five factors, it would be reasonable to treat the regular Friday lunches as a fringe benefit. They are not an exempt minor benefit.

    The manager of a small business gives Graham, an employee, a birthday present of two theatre tickets. The value of the tickets is $234.

    X

    This is an exempt minor benefit because the value of the tickets is less than $300 and, looking at the five factors, it would be unreasonable to treat the tickets as a fringe benefit.

     

    Food or drink consumed on the premises

    Food or drink you provide is exempt from FBT if it is provided:

    • to current employees
    • on your business premises
    • on a working day.

    The food or drink is exempt regardless of whether it is prepared on your premises and whether it is entertainment. (Note that a corporate box is not considered part of your business premises).

    But food or drink provided on your business premises to associates of employees (for example, spouses) is not exempt from FBT. Where you provide food and drink on the same occasion to both employees and their associates, you may need to apportion the expenditure on a per head basis.

    Example: Food and drinks provided to employees and associates on business premises
    You provided alcoholic drinks and a buffet meal for 10 current employees and their spouses on business premises on a work day. The cost was $1,000. On a per head basis the cost of the entertainment provided to employees was $50, which is exempt from FBT because the food and drink was provided on a working day on the business premises. The cost relating to entertaining the associates ($50) will be exempt from FBT if the minor benefits exemption applies.

    End of example

    Taxi travel

    If you pay for an employee's taxi travel, it will be an exempt benefit if the travel is a single trip beginning or ending at the employee's place of work. This exemption only applies to employees, it does not apply to employees' associates.

    Taxi travel

    Taxi travel

    Exempt from FBT

    FBT applies

    Employee travels from work to an external venue (such as a restaurant or home).

    X

     

    Employee travels from an external venue (such as a restaurant or home) to work.

    X

     

      Last modified: 29 Nov 2016QC 19919