Benefits to Employees in Australia – what is allowed?

An employer providing benefits to employees and associates can do so under minor benefits exemption which means the employer avoids paying FBT and the employee avoids income tax.

So what is allowed?

An employer-provided benefit (to the employee or associate eg family member) will be exempt from tax where:

  1. Notional value is less than $300
  2. It would be unreasonable to treat the benefit as a fringe benefit (ie gifts and rewards in addition to normal wages/salary)

What would make the benefit unreasonable to treat as a fringe benefit?

  1. less than $300
  2. too difficult to calculate value
  3. taxable value and associate benefits during the year and previous years are low
  4. provided infrequently/ irregularly
  5. circumstances eg reward, vehicle for emergency

Taxation Ruling TR 2007/12 provides further examples a also see ATO FBT Minutes May 2008

The ruling allows the following examples and more

  • one-off welcome gift
  • meals on ad-hoc basis
  • tolls via e-tag on ad-hoc basis
  • occasional use of employer’s car, eg emergency
  • short-term advance
  • recovery of overpaid salary by instalments
  • stationary permitted to privately use
  • use of office staff to type essays or assignments
  • allow staff to have waste or left over materials from the business, eg fabric remnants

See the links for more information. or call for a free phone discussion. +61 407 361 596

Categories Business Tax Tips & GST, Consulting

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