Changes to FBT will affect your employer clients who provide certain salary sacrificed work-related benefits to their employees.
If your clients provide salary sacrifice work-related benefits that are currently exempt from FBT or eligible for a reduced FBT liability, help them understand the potential implications of these changes.
The 'otherwise deductible rule' and salary sacrificed benefits
Employers will no longer be able to use the 'otherwise deductible rule' to reduce their FBT liability for expense payment fringe benefits that are:
- work-related
- covered by the standard deduction, and
- provided through a salary sacrifice arrangement.
This includes when employers reimburse or make a payment for work-related expenses, such as:
- home office expenses
- home phone or internet expenses
- self-education expenses.
Employers can continue to use the otherwise deductible rule to reduce their FBT liability for expense payment fringe benefits that:
- aren't covered by the standard deduction
- are covered by the standard deduction but aren't provided under a salary sacrifice arrangement.
FBT exemptions for some salary sacrificed items
Certain work-related items will no longer be exempt from FBT when provided through a salary sacrifice arrangement, including:
- portable electronic devices
- computer software
- protective clothing
- briefcases
- tools of trade.
Substantially identical function exemption
Employers will be able to provide employees with more than one eligible work-related item in an FBT year, even if it has the same or substantially identical function and continue to receive the exemption, where the items:
- are mainly used for work purposes; and
- are not provided through a salary sacrifice arrangement.
This removes the current limit of one exempt item per employee per FBT year and extends the exemption to all employers, not just small businesses.
Supporting your employer clients
Help your clients stay compliant by reviewing any work-related benefits they provide to employees. Help them understand:
- how these changes affect their FBT position and the amount of FBT they'll need to pay
- what records they need to keep
- how to calculate their FBT liability correctly
- their lodgement and payment obligations for the 2027–28 FBT year.