Employers paying for employees

Some employers support giving by paying for their employees to attend fundraising events. If an employer provides benefits to their employee or their associate, regardless of whether the benefit is part of fundraising activities, fringe benefits tax (FBT) may apply.

If an employer provides something as a benefit to an employee that they would normally be able to claim as an income tax deduction, the employer can reduce the taxable value of the benefit by the amount they would have been able to claim.

For example, if an employee incurred a work expense, it would be wholly deductible for income tax purposes. Under the otherwise deductible rule, if the employer reimburses the employee for all or part of this expense, the taxable value of the expense payment fringe benefit would be nil.

Example – Employee going to a fundraising dinner

The Homes for Homeless Teens Charity, a DGR, is organising a fundraising dinner. Tickets to the dinner are priced at $1,000. When advertising the dinner the charity explains that the cost of the meal is $100 and the balance of $900 is a tax deductible contribution. Guests must pay the full $1,000 to attend. An employee of Builders Pty Ltd attends the dinner. Builders Pty Ltd reimburses the employee for the cost of the ticket. The reimbursement is an expense payment fringe benefit. As the employee is entitled to an income tax deduction of $900, the otherwise deductible rule applies and the taxable value of the fringe benefit is reduced to $100.

End of example

See also:

Fringe benefits tax – a guide for employers

Last modified: 14 Oct 2015QC 46273