• Fringe benefits change and adjusted taxable income

    The Government has changed the treatment of fringe benefits which impacts the way adjusted taxable income (ATI) is calculated for family assistance payments, and for parental income tests which apply to youth income support payments. The ATI is also used in income tax tests such as net medical expenses tax offset, dependant tax offsets, and seniors and pensioners tax offset.

    Under the change, the grossed-up value of fringe benefits will be used for the purposes of calculating ATI. The grossed-up value of fringe benefits is already reported as reportable fringe benefits amount by the employer on their employee's pay as you go payment summary.

    Currently, the reportable fringe benefits amount is adjusted down for the purposes of calculating ATI for those benefits.

    The change will not apply to fringe benefits sourced from certain not-for-profit institutions that are eligible for exemption from fringe benefits tax, which includes registered health promotion charities, registered public benevolent institutions, some hospitals and public ambulance services. These employees will continue to be assessed under the current arrangements where the reportable fringe benefits amount is adjusted down.

    The measure, which received royal assent on 16 September 2016, takes effect from 1 January 2017 for family assistance payments and applies to income tax tests from 1 July 2017.

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      Last modified: 03 Oct 2016QC 48707