Fringe benefits tax - a guide for employers
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Chapter 5 - Reportable fringe benefits
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Some of the information on this Guide applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.
As an employer, you must record the value of fringe benefits provided to each of your employees.
If the value of certain fringe benefits provided exceeds $2,000 in an FBT year (1 April to 31 March), you must record the grossed-up taxable value of those benefits on your employee's payment summary or through Single Touch Payroll (STP) by the due date for finalisation for the corresponding income year (1 July to 30 June). You may also have to report the notional value of certain exempt benefits.
Remember, a fringe benefit may be provided by another person on behalf of an employer. It may also be provided to another person on behalf of an employee, for example, a relative.
5.1 Benefits included in the reporting requirements
The value of all fringe benefits other than excluded fringe benefits (refer to section 5.2 ) must be allocated to the relevant employees.
You must allocate to the relevant employees the notional taxable value of benefits that are exempt solely because an employee either
- works in or for a
- public benevolent institution
- health promotion charity
- public ambulance service, or
- is a live-in residential care worker.
- section 20.5 - Religious and not-for-profit organisation exemptions
These benefits are known as quasi-fringe benefits and although reportable, they remain exempt from FBT.
Any references in this chapter to 'taxable value' and 'fringe benefits' include 'notional taxable value' and 'quasi-fringe benefits' respectively.
The value of benefits exempted by other provisions (refer to Chapter 20 ) is exempt from these allocation and reporting requirements.
5.2 Excluded fringe benefits
Fringe benefits that are excluded from the reporting requirements are still subject to FBT.
You do not have to allocate the following excluded benefits to employees or report them on payment summaries. The benefits are excluded by provisions of the FBTAA and the Fringe Benefits Tax Assessment Regulations 2018 (the Regulations).
Excluded by subsection 5E(3) of the FBTAA are:
- entertainment by way of food and drink, and benefits associated with that entertainment, such as travel and accommodation (regardless of which category is used to value the benefit). However, if these benefits are provided under a salary packaging arrangement on or after 1 April 2016, they are not excluded from the reporting requirements
- car parking fringe benefits (not including car parking expense payment benefits - refer to section 9.9 )
- hiring or leasing entertainment facilities such as corporate boxes. However, if these benefits are provided under a salary packaging arrangement on or after 1 April 2016, they are not excluded from the reporting requirements
- remote area residential fuel where the value of the benefit is reduced in accordance with the conditions in section 19.2
- remote area housing assistance where the value of the benefit is reduced in accordance with the conditions in section 19.2
- remote area home ownership schemes where the value of the benefit is reduced in accordance with the conditions in section 19.2
- remote area home repurchase schemes where the value of the benefit is reduced in accordance with the conditions in section 19.2
- costs of occasional travel (being that which occurs from time to time and not at regular intervals) to a major Australian population centre by employees and their families living in a remote area
- freight costs for food provided to employees living in a remote area
- fringe benefits provided to address certain security concerns relating to the personal safety of an employee, or an associate of the employee, arising from the employee's employment.
Excluded by the Regulations pursuant to paragraph 5E(3)(i) of the FBTAA are:
- emergency or other essential health care provided to an employee or associate who is an Australian citizen or permanent resident, while the employee is working outside Australia and no Medicare benefit is payable
- certain Australian Government overseas living allowance payments, for example, cost of living adjustment, post adjustment, child supplement, child reunion supplement
- certain benefits provided to Defence Force members, for example, particular forms of housing assistance, reunion travel, assistance provided for removing and storing household effects, allowances paid to families with special needs, education assistance for children in critical years of schooling, elements of overseas living allowances, and removal expenses of a spouse due to marriage breakdown
- certain benefits provided to police officers, for example, particular forms of housing assistance, assistance provided for removing and storing household effects, certain relocation assistance and certain car benefits arising from travel between home and work by police officers using unmarked police vehicles that are fitted with a police radio and concealed or portable warning lights and sirens
- certain car benefits arising from travel between home and work by police officers, ambulance officers and fire fighters using marked emergency vehicles
- from 1 April 2007, car benefits arising from an employee's private use of pooled or shared cars
- living-away-from-home allowances provided to Commonwealth employees on or after 1 April 2012
- taxable benefits provided on or after 1 April 2012 relating to accommodation provided to Commonwealth employees whose duties of employment require them to live away from their normal residence.
Pooled or shared cars
All of the following requirements must be met in order for the benefit to be an excluded benefit:
- the benefit provided to the employee must be either a car fringe benefit or an exempt car benefit
- there must be an additional use of the same car during the year which gives rise to a car fringe benefit or a exempt car benefit for a different employee
- the employer must direct, or consent to, the use of the car by each employee.
In these circumstances, the car will be a 'pooled or shared car' during the FBT year and the reporting exclusion will apply to an employee's use of that car.
The use of a car can vary from year to year and accordingly the legislation requires that the conditions for the reporting exclusion for pooled or shared cars must be determined and met for each car and FBT year.
5.3 Individual fringe benefits amount
You must allocate the value of all benefits subject to these reporting requirements to the relevant employees. The total value of all such benefits provided to a particular employee in an FBT year is known as their individual fringe benefits amount.
Where benefits are provided to an associate of an employee, in respect of that employee's employment, you allocate the value to the employee, not to the associate.
5.4 Reporting reportable fringe benefits amounts
You only report an amount relating to an employee if the total taxable value of certain fringe benefits you provided to them exceeds $2,000 for the FBT year (1 April to 31 March).
This amount is known as a reportable fringe benefits amount (RFBA) and is calculated using the following formula:
|Individual fringe benefits amount|
|(1 - FBT rate)|
This is the same as multiplying the individual fringe benefits amount by the lower (type 2) gross-up rate. The higher gross-up rate formula is not used to calculate an employee's reportable fringe benefits amount (refer to section 2.11 ).
You can report an employee's RFBA through STP by including it in a Pay event or submitting a separate Update event. You can choose whether you report RFBA by:
- updating year-to-date RFBA throughout the year when you provide fringe benefits to your employee, or
- reporting a single RFBA annual figure between the end of the FBT year and the time you submit a declaration that you have finalised your reporting for that employee for the financial year.
An employee's RFBA that you report through STP will be displayed to the employee on their STP Employment income statement. To access their Income statement, the employee will need a myGov account linked to ATO online services.
If you cannot (or choose not to) report RFBA through STP, you must provide this information to your employee on a payment summary and provide us with a PAYG payment summary annual report. The payment summary should not include amounts you have already reported through STP.
Example - grossing-up amounts to include in STP reporting or on a payment summary
The total value of benefits provided to an employee during the FBT year 1 April 2018 to 31 March 2019 is $3,500. The rate of tax is 47%. The value of reportable fringe benefits is calculated as follows:
|$3500||=||$6,603 (in whole dollars)|
|(1 - 0.47)|
|$3,500||×||1.8868||=||$6.603 (in whole dollars)|
You include the reportable fringe benefits amount relating to benefits provided during the FBT year (1 April to 31 March) in your STP reporting or on a payment summary for the corresponding income year. For example, you include the value relating to benefits provided during the FBT year 1 April 2019 to 31 March 2020, in your STP reporting or on a payment summary for the income year 1 July 2019 to 30 June 2020.
Example - working out amounts to include in STP reporting or on a payment summary
Between 1 April 2018 and 31 March 2019 (the 2018-19 FBT year) you provide an employee with:
- a work car, with a taxable value of car fringe benefits totalling $1,440
- holiday accommodation with a taxable value of $600
- a briefcase primarily for use in their employment ($200)
- a mobile phone primarily for use in their employment ($300)
- reimbursement of the employee's Higher Education Loan Program (HELP) debt ($300).
- reimbursement of spouse's HELP debt ($550).
The total taxable value of fringe benefits for this employee is $2,890. The total excludes the briefcase and mobile phone as they are exempt and are not considered to be fringe benefits. However it includes the reimbursement of the spouse's HELP debt as fringe benefits provided to an employee's spouse are allocated to the employee.
The reportable fringe benefits amount will be included in the employer's STP reporting, or on a payment summary issued to the employee, for the income year ending 30 June 2019.
|$2,890||×||1.8868||=||$5,452 (in whole dollars)|
$5,452 will be included in the employer's STP reporting, or on a payment summary issued to the employee for the income year ending 30 June 2019.
The exemption under section 57A of the FBTAA is limited to the following types of entities and circumstances:
- registered public benevolent institutions endorsed by the Commissioner as eligible for exemption from FBT
- government bodies where the employee's duties are exclusively performed in or in connection with
- a public hospital, or
- a hospital carried on by a society or association that is a rebatable employer
- registered health promotion charities endorsed by the Commissioner as eligible for exemption from FBT, or
- public ambulance services and the employee is predominantly involved in providing that service.
If you report RFBA through STP there are two amount fields - 'exempt' and 'non-exempt'. These fields represent:
- RFBA reportable by an employer that is exempt from FBT under section 57A of the FBTAA, and
- RFBA reportable by an employer that is not exempt from FBT under section 57A of the FBTAA.
If your entity is exempt, include the RFBA you need to report in the 'exempt' field even if you provided the employee with fringe benefits in excess of the relevant capping threshold. See section 6.3 for an explanation of the capping thresholds.
Otherwise you should report RFBA in the 'non-exempt' field.
If you include RFBA on a payment summary rather than reporting it through STP, there is only one amount label and you need to complete the following indicator box:
Select Yes if you are eligible for exemption from FBT under section 57A for the benefits provided as a:
- registered public benevolent institution that is endorsed by the Commissioner as eligible for exemption from FBT
- government body and the employee's duties are exclusively performed in or in connection with
- a public hospital, or
- a hospital carried on by a society or association that is a rebatable employer
- registered health promotion charity that is endorsed by the Commissioner as eligible for exemption from FBT, or
- public ambulance service and the employee is predominantly involved in providing that service.
If your organisation is one of these entities you should select Yes even if you provided the employee with fringe benefits in excess of the relevant capping threshold. See section 6.3 for an explanation of the capping thresholds.
Otherwise, select No.
If you do not have any reportable fringe benefits amounts to report, you should leave both boxes blank.
An employee may change roles within an organisation that is eligible for exemption under section 57A. For instance, an employee of a state health department may work as a nurse in a hospital (exempt duties) for part of the FBT year and, in an administration role at head office (non-exempt duties) for the remainder. If an employee performs both exempt and non-exempt duties during the year while receiving reportable fringe benefits, the employer will have to provide two payment summaries.
If the combined value of the exempt and non-exempt fringe benefits exceeds $2,000 in the FBT year, you must provide the grossed-up taxable value of each fringe benefit on a separate payment summary. On one payment summary you will show the section 57A exempt reportable fringe benefits amount and select Yes. On the other payment summary you will show the non-exempt reportable fringe benefits amount and select No.
No more than two payment summaries are required, even if the employee has several periods of exempt and non-exempt service. You should report all of the exempt amounts in one payment summary and all of the non-exempt amounts in a second payment summary.
5.5 What is RFBA included in STP reporting or on a payment summary used for
Even though a reportable fringe benefits amount is shown on an online STP Employment income statement or on a payment summary, it is not included in the employee's assessable income. It is, however, used to assess the employee's eligibility for transfer payments and other tax concessions as well as an employee's liability to certain levies and surcharges, including:
- Medicare levy surcharge
- private health insurance rebate
- Additional tax on concessional contributions (Division 293) - information for individuals for superannuation contributions
- tax offset for eligible spouse superannuation contributions
- government co-contribution for personal superannuation co-contributions the employee made
- Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS), Student Start-up Loan (SSL), ABSTUDY Student Start-up Loan (ABSTUDY SSL) and Trade Support Loan (TSL) repayments
- child support obligations
- entitlement to certain income-tested government benefits.
Example - Medicare levy surcharge
In the 2017-18 income year, an employee has a taxable income of $70,000 and a reportable fringe benefits total of $40,000. The employee's spouse has a taxable income of $70,000 and a reportable fringe benefits total of $10,000. Therefore, the couple's family income is $190,000. They have three dependent children. No one in the family is covered by private hospital insurance.
The couple's family threshold for the surcharge is $183,000 (($180,000 + $1,500) × 2) for the 2017-18 income year. As their family income ($190,000) exceeds their family surcharge threshold and they are both liable to pay the Medicare levy, the Medicare levy surcharge would apply to both individuals. The amount of surcharge payable by the employee for the 2017-18 income year would be $1,100 (the Tier 1 surcharge rate (1%) multiplied by the employee's taxable income + reportable fringe benefits, that is 1% of $110,000). The amount of surcharge payable by the employee's spouse for the 2017-18 income year would be $800 (1% of $80,000).
Example - HELP debt
An employee has a HELP debt of $10,000, taxable income of $45,000 (including a net rental loss of $2,000), and a total reportable fringe benefits amount of $17,000. In the 2017-18 income year, they would have to make HELP repayments of $2,880 (being 4.5% of the employee's Australian repayment income of $64,000 ($45,000 + $2,000 + $17,000)).
5.6 Employee's share
An employee's individual fringe benefits amount must include their share of any benefit provided to more than one employee, for example, a boat that may be used by a number of employees during the FBT year.
The legislation does not specify what method you must use to allocate the value of the benefit to each employee. It does, however, require you to reasonably allocate the taxable value between the recipient employees, taking into account all relevant factors.
The portion of the taxable value you allocate to each employee must reasonably reflect the amount of the benefit in respect of each employee's employment. In addition, you must allocate the total taxable value of the benefit among the relevant employees.
Example - allocating the benefit - holiday package
An employer gives two employees a holiday package as a fringe benefit. The package is for two people and cannot be taken as two single holidays. The taxable value of the package is $5,000.
It would be reasonable for the employer to allocate the taxable value between the employees on a 50-50 split basis. Therefore, each employee's share would be $2,500.
Example - allocating the benefit - residual fringe benefit
An employer has a motorbike that is used for business purposes and is available for unlimited private use by 10 employees, who benefit equally from use of the motorbike. The taxable value of the residual fringe benefit is $4,500.
The employer could calculate each employee's share as:
|Total taxable value|
|Number of recipients|
5.7 What happens when an employee ceases employment and has reportable benefits?
Where an employee ceases employment between 1 April and 30 June in a particular year and you have provided them with reportable benefits since 1 April in that year, you must show the amount of the reportable benefit in your STP reporting or on a payment summary for that employee for the income year ended 30 June in the following year. This is the case even though you have not paid them salary or wages during that income year.
When an employee ceases employment and has a reportable fringe benefits amount, you can report this in the same way you would if they still worked for you.
You do not have to submit a declaration that you have finalised your reporting for that employee for the financial year, or provide them with a payment summary, before the end of the income year covered by that declaration or payment summary.
An employee ceases employment with a particular employer on 15 May 2019. Between 1 April 2019 and 15 May 2019 the employee was provided with fringe benefits with a reportable value of $4,000.
The reportable amount of $4,000 must be included in the employer's STP reporting for the income year ended 30 June 2020 or shown on a payment summary covering that income year.
5.8 Who must have RFBA included in STP reporting or be issued with payment summaries?
For FBT purposes, the definition of 'employee' has been extended to include former employees, future employees and those who receive benefits, but no salary or wages, in return for employment type services.
Anyone provided with reportable fringe benefits must be have an RFBA reported through STP or be issued with a payment summary, even if they are not paid salary or wages during that income year.
As part of his remuneration package, a company manager was granted the use of a company-owned house for life. The manager retired in 2006 and continues to occupy the company house. The market rental value of the house is $15,000 for the FBT year 1 April 2018 to 31 March 2019.
The reportable fringe benefit that must be included in the employer's STP reporting (or shown on a payment summary) for the income year ending on 30 June 2019 is $28,302, calculated as follows:
5.9 Correcting an amount you have already reported
Where you have inadvertently understated an employee's reportable fringe benefits amount by $195 or less, you do not have to amend your STP reporting or the payment summary you have issued to the employee unless the Commissioner is of the view that you have deliberately understated the amount of fringe benefits provided to the employee.
To correct a reportable fringe benefits amount that you have included in STP reporting, you should submit an Update event as soon as possible to include the correct information.
- identify that the RFBA you have reported through STP is not correct, and
- you do not yet know what the correct information is, and
- you have already submitted a declaration that you have finalised your reporting for that employee for the financial year
you should submit an Update event with the previous details and the finalisation indicator removed. This will advise your employee that the current information is not final and that they should be cautious of including that information in their tax return.
When you determine what the correct information is, you should submit another Update event that includes the correct information and make another declaration that you have finalised your reporting for that employee.
You can only make changes to information reported through STP up to five years after the end of financial year.
To correct a reportable fringe benefits amount on a payment summary already issued to an employee, you need to complete a new payment summary, marking the amending a payment summary box.
When you complete amended payment summaries, you must:
- complete all payee, payment and payer information on each amended payment summary
- send it to us
- give a copy to the payee.
If the employee has already lodged their tax return, they should request an amendment to their reportable fringe benefits amount.
If the change alters the amount of your FBT payable, you also need to request an amendment to your FBT return (refer to section 3.4 ).
5.10 Special rule - employers using the record-keeping exemption arrangements
You may have chosen to lodge FBT returns under the record-keeping exemption arrangements (refer to section 4.7 ). Under these arrangements, your aggregate fringe benefits amount in a base year may form the basis for calculating your FBT liability in a following year. If you use this method of calculation in a following year, you cannot exclude any benefits when allocating the value of benefits to individual employees. You have to allocate the entire aggregate fringe benefits amount from the base year among the employees to whom you provided benefits in that following year.
Your method of allocation must be reasonable, having regard to the fringe benefits provided in that year in respect of each employee's employment.
5.11 Relationship with employees
As the provision of fringe benefits could affect an employee's obligations and entitlements, you may wish to discuss with employees such issues as:
- which fringe benefits they receive, as some employees may not identify some items as being fringe benefits
- the actual or approximate value of fringe benefits provided (employees may not be aware of fringe benefits valuation rules)
- the method used to reasonably apportion the value of shared benefits (where you and your employees can agree on a suitable method, this may reduce the need for detailed record keeping).
In some cases, an employee may wish to reduce the reportable fringe benefits amount reported for them through STP or shown on their payment summary for future years. Where you and the employee agree, the following options may be considered:
- replacing fringe benefits with cash salary
- providing benefits that are exempt from FBT
- providing benefits that the employee would otherwise have been able to claim as an income tax deduction
- making employee contributions to reduce the taxable value of a fringe benefit.
The contributions must be made from an employee's after-tax income, and employee contributions towards a particular benefit cannot be applied to reduce the taxable value of any other fringe benefit.
For more information, refer to:
- Reportable fringe benefits - facts for employees
- How to complete the PAYG payment summary - individual non-business.
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