bO2 2022 – Ch 15 – Fringe Benefits Tax (FBT)

James Murphy

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A fringe benefit is a benefit provided by an employer to an employee or their associate in respect of their employment.

These benefits are not taxable to the employee; however, the employer may be liable to pay fringe benefits tax on the grossed-up amount of the value of the benefit.

The Main Types of Fringe Benefit Are:

  • Car fringe benefits
  • Debt waiver fringe benefits
  • Loan fringe benefits
  • Expense payment fringe benefits
  • Housing fringe benefits
  • Living away from home allowance
  • Board fringe benefits
  • Meal/entertainment fringe benefits
  • Tax-exempt body fringe benefit
  • Car parking fringe benefits
  • Property fringe benefits
  • Residual fringe benefits.


The FBT year runs from 1 April and finishes on 31 March and: 

  • FBT is currently levied at 47% of the grossed-up value of a benefit
  • The tax is paid by employers regardless of the type of entity
  • FBT is paid quarterly with the FBT return lodged at year end
  • FBT is calculated on a self-assessment basis
  • FBT is tax-deductible to the employer, along with the cost of the benefit paid
  • As tax has already been paid on the benefit by the employer, employees do not pay tax on benefits
  • The amount of benefits paid to an employee while not taxable to that employee may effect repayment of HELP debts, eligibility for welfare payments, and other items
  • FBT is payable on benefits made by the employer no matter whether they are profitable or not for the year
  • The taxable value of the benefit is grossed up using the following mark-ups: For entities registered for GST 2.0802 and 1.8868 for those not claiming input tax credits.

Fringe Benefits Tax rates

The FBT rate aligns with the top marginal rate of income tax for individuals. The removal of the Temporary Budget Repair Levy, therefore, impacts the FBT rates (both the tax rate and gross-up rate) applicable from 1 April 2017 as follows:

  • The Type 2 gross-up rate has changed from 1.9608 to 1.8868
  • The FBT rate decreased from 49% to 47%.

The cash value of benefits received by employees of benevolent public institutions and health promotion charities, public and not-for-profit hospitals, public ambulance services and certain other tax-exempt entities increased for the 2016 & 2017 FBT years due to the change in FBT rate.

Specifically, the $17,000 cap was increased to $17,667 and the $30,000 cap was increased to $31,177 for the 2016 & 2017 FBT years only. 

Example:  FBT calculation and taxable value gross-up (2021/22)

Value of benefit provided (Inc. GST) $5,000

Taxable Value = $5,000 x 2.0802        $10,401

FBT payable = $10,401 x 47%                  $4,888

The concept of calculating taxable value as demonstrated above is very important and will be referred to frequently in this Chapter.

The main aim of FBT is, in effect, to tax the benefit so that it really makes very little difference whether the employer provides it to the employee, or the employee pays for it out of their after-tax dollars – assuming that the employee is on the highest marginal rates (over $180,000 per annum). There may be savings through the provision of exempt benefits or concessionally taxed benefits which will be discussed later in this Chapter.

Where an employee is on less than the highest marginal rates, a tax disadvantage arises (to the employer). It would be cheaper to pay the employee the extra wages rather than pay the benefit and FBT at 47% on the grossed-up amount.

The FBT exemption for work-related items only applies if used primarily for work purposes and are limited to one item of each type per employee per FBT year, unless they are replacement items.

In the May 2015 budget, it was announced that from 1 April 2016, the Government will allow an FBT exemption for small businesses that provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions.

The list of FBT-exempt work-related items was extended to all work-related portable electronic devices, including those with multiple functions.

Employees will be denied depreciation for the work-related percentage of FBT-exempt items in their personal income tax returns.



A fringe benefit has been provided when an employer provides an employee with a car used (even in part) for private purposes.

A car will be deemed to be used for private purposes if:

  • It is garaged or kept near the residence of the employee.
  • The car is not at the employer’s address, and the employee may use the car for private purposes.
  • Control of the vehicle resides with the employee outside business hours.

A motor vehicle is defined as a motor car, station wagon, panel van, utility or other vehicle designed to carry less than one tonne or less than nine passengers. Motorbikes and taxis are specifically excluded from the definition.

A vehicle will be excluded if it is not designed to carry passengers mainly. If used privately, it was only done to travel from home to work, which was incidental to the employee’s normal travel for work.

The taxable value of a car for FBT can be calculated by the employer using two methods: the statutory formula and the operating costs basis. The employer is able to choose the method that best suits their circumstances; however, where a selection is not made, the statutory method will be applied. Careful consideration needs to be given in particular circumstances to the decision to provide a car to an employee and which method is used. 

Statutory method

Under the statutory method, the following formula is used to calculate FBT:

Base value of car times Statutory Fraction times Percentage private use days less employee’s payment.

The vehicle’s base value is the cost price, including all options, but not including registration and stamp duty. For a leased vehicle, the base value is the market value of the vehicle and insurance. The base value is taken from when the employer first held the asset (i.e., from purchase).

The percentage applicable depends on the total number of kilometres the car travelled (for both business and private purposes) in the FBT year. Kilometre readings are taken at 31 March each year.

Current rates are:  You will see from the below table that for new contracts entered into after 1 April 2014, there is uniformity at a flat 20%.

However, the old rates may be relevant for existing contracts.

If a vehicle has been owned or leased for more than four years, the cost of the car is reduced to two-thirds of its original cost. The reduction in cost base applies from the start of the FBT year following the fourth anniversary of when the car was acquired or leased.

Where a car was not held for a full 12 months, the kilometres were annualised using the formula:

The number of kilometres travelled X the number of days in the FBT year

The number of days the car is held by the provider

For example, a vehicle is held for four months and travels 4,000km. The annualised kilometres would be 12,000km.  Of course, given a flat 20% rate from 1 April 2014, this is now less relevant.

However, where a car is not available for private use, the FBT benefit amount is reduced according to the portion of days not available for private use.

Commencing 1 April 2014, there is complete uniformity in the statutory formula rate – see table below.  As this can result in high amounts of FBT payable, consideration should be given to all relevant staff having a complying logbook to establish business use if this is significant.



Existing Contracts


New Contracts entered into after 7.30 pm (AEST) on 10 May 2011

10 May 2011



1 April 2012



1 April 2013



1 April 2014


0 – 15,000km 0.26 0.20 0.20 0.20 0.20
15,000 – 25,000km 0.20 0.20 0.20 0.20 0.20
25,000 – 40,000km 0.11 0.14 0.17 0.20 0.20
More than 40,000km 0.07 0.10 0.13 0.17 0.20


Operating costs method

Under this method, the taxable value of the vehicle is calculated using the actual costs incurred in operating the car and the actual private usage percentage. A logbook must be kept for 12 weeks and replaced every five years to be eligible for this method. The diary must contain for each business trip:

  • Date the trip started and finished.
  • Odometer readings at the start and finish of the trip.
  • Purpose of the trip.
  • The number of kilometres travelled.
  • The entries should be made as soon as practical after the journey.
  • The logbook should be in English.

At the completion of the 12-week period, a business portion can then be calculated, which will be the basis for determining the taxable value. If the business usage of the vehicle falls by more than 10 per cent, the logbook must be redone. 

The formula for calculation – Operating cost

Operating costs times (private kilometres divided by total kilometres) minus employee contribution.

Operating costs include repairs, fuel, and registration, insurance and (if the car is owned) a deemed depreciation based on the FBT deemed depreciation rate (i.e., 25% of car purchased after 10 May 2006) and an interest component based on the FBT benchmark rate 4.52% for 31 March 2022.  If the car is leased, the leasing costs will take the place of depreciation and interest.

Example: At 1 April 2020, the written down value of a car provided to an employee is $40,108.  Registration and insurance cost $1,600, and the employee paid for half of these.  Fuel and repairs cost $4,000.

The logbook showed that 85 per cent of total kilometres travelled in the 12-week period were for business purposes.

The calculation is as follows: 

Operating costs

Registration and insurance                                       $ 1,600

Fuel and repairs                                                            $ 4,000

Depreciation (25% of $40,108)                                  $ 10,027

Interest component 4.52% of $40,108                    $ 1,813

Total operating costs                                                  $ 17,440


The business use percentage is 85 per cent; hence the private use is 15 per cent.  The value of the benefit provided and the FBT payable is calculated as follows:

15% of $17,440                                               $2,616

Less employee contributions                 ($800)

Value of benefit                                           $1,816

Grossed up value $1,816 x 2.0802        $3,778

FBT payable = $3,778 x 47%                     $1,776



In June 2021, the ATO released fringe benefits tax (FBT) ruling TR 2021/2 on car parking benefits, clarifying when a car park is a “commercial car parking facility, ” including the objective characteristics that should be taken into account, complete with examples. However, the ruling does not consider the 2021 Virgin Airlines decision dealing with “primary place of employment”.

Further amendments are expected to address this issue. Note the exemption for employers turning over less than $50 million from 1.4.2021. 


A car parking fringe benefit will generally arise if an employer provides car parking to an employee and all the following conditions are satisfied:

  • the car is parked at premises owned or leased by, or otherwise under the control of the provider (usually the employer)
  • the car is parked for a total of more than four hours between 7 am and 7 pm on any day of the week
  • the car is owned by, leased to, or otherwise under the control of an employee or is provided by the employer
  • the parking is provided in respect of the employee’s employment
  • the car is parked at or near the employee’s primary place of employment on that day
  • the employee uses the car to travel between home and work (or work and home) at least once on that day
  • there is a commercial parking station that charges a fee for all-day parking within one kilometre of the premises on which the car is parked, and
  • – the commercial parking station fee for all-day parking is more than the car parking threshold, and
  • – at the beginning of the fringe benefits tax (FBT) year, the commercial parking station fee for all-day parking was more than the car parking threshold.

The current car parking threshold can be found at Fringe benefits tax – rates and thresholds.

Car parking is exempt from FBT, where an employer provides parking to an employee and not all of the above conditions are satisfied – for example if car parking is provided for less than a total of four hours between 7 am and 7 pm.


Car parking benefits are exempt from FBT where the benefits are provided:

  • by employers who meet the conditions of the small business car parking benefits exemption
  • by certain research, education, religious and charitable institutions
  • for employees with a disability (irrespective of the type of employer).

The small business car parking benefits exemption applies if all the following conditions are satisfied:

  • the parking is not provided in a commercial car park
  • the employer is not a government body, a listed public company, or a subsidiary of a listed public company
  • for the last income year before the relevant FBT year, either the employer’s
  • – gross total income was less than $10 million
  • – turnover was less than $10 million (less than $50 million for benefits provided on or after 1 April 2021). 


Where an employer provides a car park to an employee, a taxable benefit may be made. A car parking benefit will arise when:

  • A commercial parking station (not a kerbside parking meter) charges more than $9.25 per day for 2021/22 ($9.15 per day for 2020/21) for car parking within one kilometre of the employer’s premises.
  • The employee parks their car in the employer’s car park for more than four hours between 7 am and 7 pm.
  • The employee uses the car to travel from home to work.

Small businesses that are neither a government body nor a listed public company with a turnover of less than $10 million that provide parking on their own premises are exempt from FBT on these benefits.

Where a car parking benefit arises, and a fringe benefit occurs, there are a number of options for employers in calculating the value of the benefit, being:

  • Commercial parking station method
  • The market value method
  • The average cost method
  • Statutory formula – spaces method
  • 12-week register method. 

The commercial parking station method: Uses the lowest cost commercial all-day parking station within a one-kilometre radius of the employer’s premises. It must be the day rate, and the value of the benefit is reduced by any contribution made by the employee.

The market value method: Calculates the value of the benefit supplied by the employer to the employee by using an “arm’s length” comparison. In other words, if the employee and employer were unrelated, how much would a person normally expect to pay to park there?

The employer must meet certain rules regarding documentation of such a valuation, being:

  • The description of the car park
  • The number of parks valued
  • The day rate per car in the car park
  • The name of the valuer and that it is an arm’s length valuation.

The value of the benefit is reduced by any contribution made by the employee.

The average cost method: Is calculated by reference to an average of the lowest fees charged by a commercial operator within a one-kilometre radius of the employer on the first and last day of the FBT year. 

The statutory formula – spaces method: The taxable value for each car space for an employee is determined by multiplying the daily rate amount by the statutory number of days – being 228 days.

The 12-week register method: The employer keeps a register and a listing of employees it covers under this method. If over a 12-week period, an employer provided 50 spaces with a taxable value of $11 each, the total taxable value would be:

50 (spaces) x $11 (each) x 52/12 (gross-up) $2,383

So FBT would be:

Value of benefit provided (Inc GST)   $2,383

Taxable Value = $2,383 x 2.0802          $4,957

FBT payable = $4,957 x 47%                    $2,330



Where an employee receives a loan from an employer, and that loan is later waived. The employer has provided a taxable benefit to the employee for the amount of the loan plus any unpaid interest.


A loan fringe benefit arises when an employer provides a loan to an employee at a rate lesser than the benchmark rate of 4.52% for the year ended 31 March 2022 (4.8% for year ending 31 March 2021).

The benefit will be the difference in the interest rate charged and the relevant statutory rate.

If the employee could have claimed a deduction for the interest, then the benefit will be exempt under the otherwise deductible rule (discussed later in this Chapter).

Suppose the funds were advanced for the employee to pay for expenses in relation to their duties. In that case, that payment will also be exempt, provided the expenses are incurred within six months of payment, and the loan does not greatly exceed the projected expenditure. The employee should keep detailed records and repay any unused funds.


An expense payment fringe benefit occurs when an employer pays an expense on behalf of the employee, for example, a telephone bill.

The taxable value of the benefit is the amount paid for or reimbursed and can be reduced by the otherwise deductible rule.

For Example, Jane’s employer pays a $300 mobile phone bill on her behalf. Jane has kept records, and of that $300, $200 was for work purposes. The taxable value of the benefit will be $100, being the private portion of the reimbursement.


Entertainment fringe benefits arise on the provision of food, drink or recreation to an employee or their associates.

The determination of meal entertainment is crucial, as:

  • Meal entertainment provided in respect of employees are tax-deductible, subject to FBT, and enables the employer to claim

GST input tax credits on the expenditure; and

  • Meal entertainment provided for non-employees is not tax deductible, not subject to FBT, and the employer cannot claim GST Input tax credits on the expenditure.

It is necessary for employers to allocate their expenditure between that for employees and non-employees.  There are three methods to choose from in determining the taxable value of meal entertainment.

These are:

  1. Based on actual costs incurred by the employee – the FBT is based on the costs of the actual entertainment provided to employees.
  1. Twelve Week Register Method – FBT payable is based on the total entertainment expenditure incurred by the employer on all employees for the year, multiplied by the register percentage. The register percentage is based upon a detailed register of expenditure in the period covered.
  1. 50/50 Split Method – the FBT payable is based on 50 per cent of the entertainment expenses paid by the employer during the FBT year.

Changes for employees

From 1 April 2016, there were changes to the FBT treatment of salary packaged meal entertainment and entertainment facility leasing expense benefits (meal and other entertainment benefits). Some of the changes will affect all employees, while others will affect employees of not-for-profit organisations.

The following applies to all employees:

  • All salary packaged meals and other entertainment benefits are reportable and included on the payment summary where the reporting exclusion threshold is exceeded.
  • The employer cannot use the 50-50 split method and 12-week register method for valuing salary packaged meal and other entertainment benefits, which may affect how much an employee can salary package.

For employees who work for a not-for-profit employer:

  • A separate single grossed-up cap of $5,000 will apply for salary packaged meal and other entertainment benefits for employees of not-for-profit organisations able to access a general FBT exemption or rebate ($30,000 or $17,000 exemption or $30,000 rebate).
  • The amount of those benefits exceeding the separate grossed-up cap of $5,000 are included in calculating whether the value of all benefits an employee receives exceeds the general FBT exemption or rebate cap.

This means that from 1 April 2017,  employees can receive such benefits worth between $2,403.61 and $2,649.99 (depending on whether the employer is entitled to GST credits) without exceeding the $5,000 cap. 


A property fringe benefit may arise when a benefit is provided to an employee such as any goods, animal, real estate, legal property, gas, and electricity, etc.

These benefits can be divided into two groups: those provided in the normal course of the employers’ business (in-house benefits) and those benefits that the employer would not normally provide as part of their business.

Goods normally sold to the public (in-house benefits): These are goods supplied by the employer to the employee that would normally be available to the general public.

For example, A furniture manufacturer provides an employee with a piece of furniture. The first $1000 of the taxable value of an in-house benefit provided to an employee is exempt from FBT.

Furthermore, the taxable value of those goods is reduced to 75 per cent of the lowest price charged in the ordinary course of business for identical goods less what the employee paid for them.

For example, the furniture manufacturer sells a setting to an employee for $400 that it would normally charge the public $2000. The taxable value would be:

Normal retail price of $2,000 x 75%           $1,500

Less: Amount paid by employee                 ($400)

Less: in-house benefits exemption         ($1,000)

Taxable value of fringe benefit                    $ 100 

Goods not normally supplied to the public: The taxable value of these goods provided by the employer to the employee is the lowest arm’s length price of identical goods, less what the employer paid for them.


A housing fringe benefit arises when an employer provides an employee and/or their associates a unit of accommodation used as a normal place of residence.

The term unit of accommodation is broad and can refer to a house, flat, unit, hotel, motel, guesthouse, ship, caravan or mobile home.

The taxable value of the benefit is the market value of the accommodation, less any amount contributed by the employee.

Suppose accommodation is provided in the normal course of business for the employer (for example, a motel operator). In that case, the taxable value of those goods is reduced to 75 per cent (see above for in-house benefits supplied to an employee as a worked example). 


Board fringe benefits apply when an employee is provided with accommodation and entitled to two meals per day under an award or employment arrangement.

Normally this would apply to shearers, stock workers and employees that work in remote locations such as oil rigs and ships. These meals must be cooked, prepared, and provided on the employer’s premises.

The taxable value of each meal provided to a person 12 years or over is $2 and $1 for those under 12 years of age. 


Benefits provided for remote area accommodation are exempt from FBT. In order to be considered remote:

  • The accommodation must be 40km or more from a town with a population of 14,000 or more
  • The accommodation must be 100km or more from a town with a population of 130,000 or more
  • For Zone A + B accommodation. The accommodation is considered remote where it is 40km or more from a town with a population of 28,000 or more; or 100km from a town with a population of 130,000 or more.


Transitional rules that applied to Living Away From Home Allowance (LAFHA) benefits where agreements were entered into prior to 7.30 pm on 8 May 2012 phased out on 1 July 2014.

Suppose there were such agreements in place for employees required to live away from their usual place of residence. In that case, it is necessary to consider whether the new rules to alter the FBT exemption apply to the food and accommodation components of the allowance for the FBT year ending 31 March 2015 and future years.

The new rules only allow the exemption for employees who owned or leased a home in Australia personally or whose spouse did throughout the assignment period during which the employee was required to live away from home.  The use of that residence must have continued to be available to them during the period of their assignment.

That residence must reasonably be expected to remain at their home at the assignment’s conclusion.

Even where the above conditions are satisfied, the new rules only allow the exemption to apply for a 12-month period, commencing from the start of the assignment.

For employees’ subject to the transitional rules, the 12-month period was deemed to have commenced on 1 October 2012.

This will mean no exemption may apply for your employees who had already been on assignment during the transitional period.

LAFHA, as defined by the ATO, is:

“An allowance that must be in the nature of compensation to the employee for additional expenses incurred as a consequence of an employee being required to live away from their principal place of residence in order to perform the duties of that employment.”

The key terms here are “Additional expense” and “Principal Place of Residence”.

These are clear indications of the nature and intention of LAFHA being an allowance for inconveniencing an employee.

You must be considered an employee who is living away from your usual place of residence when:

  • There is no change of job location (and the family may follow)
  • The employee intends to return to their original location after time away; and
  • The period away exceeds 21 days (ATO’ rule of thumb’).

LAFHA is paid in two components, the Accommodation Component and Food Component. 

The Accommodation Component

The Accommodation Component must pass the ATO test so that it is considered to be “reasonable” for you, e.g. a one-bedroom apartment for a single person or multiple bedrooms for a family in a “middle of the range” dwelling.  The key here is to apply “common sense”, ensuring the ATO is never given cause to investigate you.

However, once an employee or a contractor starts to make their own decisions regarding lifestyle and employment changes, such as selling their former place of residence or deciding to remain in the temporary place of residence indefinitely, LAFHA ceases to be payable.  Further, if a contractor moves interstate to work for one recruitment company and then transfers to another recruitment company, LAFHA will cease.

Any overpayments will always have to be paid back to the ATO without exception.

Living Away From Home Allowance – Food guidelines

Under the Fringe Benefits Tax (FBT) rules, individuals who satisfy the living away from home criteria can be paid a Living Away From Home Allowance (LAFHA), which benefits from concessional tax treatment.  Each year the ATO issues guidelines for the amount of the food component it will regard as reasonable.

The table below breaks down the reasonable food component amounts into the statutory and exempt components and the maximum amounts that can be paid to employees on a tax-free basis for each family size of the FBT years ended 31 March 2021 (Tax Determination TD 2020/4) and 31 March 2022 (TD 2021/3).


Reasonable Food


31 March 2022 31 March 2021
1 adult $283 per week $276 per week
2 adults $425 per week $414 per week
3 adults $567 per week $552 per week
1 adult and 1 child $354 per week $345 per week
2 adults and 1 child $496 per week $483 per week
2 adults and 2 children $567 per week $552 per week
2 adults and 3 children $638 per week $621 per week
3 adults and 1 child $638 per week $621 per week
3 adults and 2 children $709 per week $690 per week
4 adults $709 per week $690 per week



Changes to airline transport fringe benefits

There is no longer a separate category of fringe benefits for airline transport fringe benefit.  Airline transport fringe benefits are now taxed under in-house property or in-house resident fringe benefit.

The Government has updated the method of determining the taxable value of airline transport fringe benefits from standby value to market value.  This measure applies to benefits provided after 7.30 pm (AEST) on 8 May 2012.

An airline transport fringe benefit may arise when an airline or travel agent employee is provided with free or discounted travel on a standby basis.  The taxable value of airline transport fringe benefits is currently the standby value of the benefit less the employee contribution.  This method was developed when standby travel was a feature of commercial airline pricing, and staff could be displaced from a flight up to the time of boarding.  However, according to the Government, the concept of standby travel is no longer commercially relevant as airlines now use discounted pricing to optimise passenger levels.

This reform progresses recommendation 9(a) of the Australia’s Future Tax System review, which stated that “market value should generally be used to value fringe benefits.” 


Any other benefit provided to an employee who is not specifically covered by the FBT legislation may come under the realms of a residual fringe benefit. Apart from the limits for in-house benefits, the taxable value will be the value an arm’s length person would have paid for the same benefit, less any contribution made by the employee.


The taxable value of a fringe benefit may be reduced or eliminated under the otherwise deductible rule.

This occurs where the employee would have been able to gain a tax deduction for the expense in their own return had the employer not paid the expense. Where there is a private portion involved, that part only would be subject to FBT.

The employer must obtain a declaration from the employee that the benefit is being used for employment purposes.

For example, Mike is an engineer with BHP Ltd. His employer pays his annual Institute of Engineers membership which is a professional association. The renewal costs $750. As an employee engineer, Mike would have been able to claim that expense personally, so under the operation of the otherwise deductible rule, the taxable value of the benefit would be zero.

As a result of the National Bank case, a benefit provided jointly to an employee and an associate is deemed to be received solely by the employee (section 138/C31).  This case related to a low-interest loan to a bank employee.

The otherwise deductible rule was amended (effective 13 May 2008) to ensure that the full value of a benefit that has been provided to both an employee and an associate is subject to FBT.  An example would be a low-interest loan related to an investment property.

The intention here is to overcome the decision in the National Bank case and reinstate the principle that deductions relating to the jointly held assets be allocated between owners according to their legal interests. 


Employers are required to include the grossed-up amount of reportable fringe benefits on the payment summaries of their employees.

Whilst not subject to tax, these amounts are added to the employer’s taxable income in order to:

  • Assess income levels for the purposes of some welfare payments, including child support
  • Assess liability for the Medicare levy surcharge
  • Be added to taxable income to determine HECS repayment income.

If the total value of fringe benefits provided to the employee is less than $2,000, no amount needs to be reported.

Reportable fringe benefits are grossed up, so a fringe benefit with a taxable value of $2,000 becomes a reportable fringe benefits amount of $4,160. 


The following are some of the key items that are exempt from FBT:

  • Minor and infrequent benefits of less than $300;
  • Work-related items, including:
  • Tools of trade
  • Laptops and portable printers
  • Subscriptions to work-related journals
  • Corporate credit cards
  • Airport lounge memberships
  • Mobile phones with minor private use
  • Protective clothing
  • Briefcase
  • Calculator and electronic diaries
  • Benefits provided to public and non-profit hospitals employees are exempt to a maximum grossed-up value of $17,000 per employee.
  • Taxi travel required due to illness or injury, also any travel that begins or ends at the employee’s place of work. Due to the FBT Act changes made in 2020, the definition of “taxi” now includes rideshare services such as Uber.
  • Healthcare, food, clothing, accommodation, and transport provided in cases of emergencies.
  • Private telephone calls made on work phones.
  • Food and drink consumed on business premises on a workday.
  • Living Away From Home Benefits: If the employee is required to live away from their usual home to perform employment duties. Certain prescribed benefits, including food and accommodation allowances, may be provided FBT-free.
  • Benefits provided to employees of public benevolent institutions. The exemption is limited to a grossed-up value of $30,000 per employee.
  • In-house Benefits: Recreational facilities, childcare facilities located on the employer’s business premises, health care facilities and car expense payments where the employee is reimbursed on a cents per kilometre basis, car parking on the employer’s business premises if the employer has gross income of less than $10 million. Note from 1 April 2014; Concessional benefits were removed for in-house benefits if accessed through a salary sacrifice arrangement.
  • Relocation Costs: Expenses incurred in moving an employee from one location to another for work purposes.
  • Medical Treatment under Workers’ compensation, Workers’ Compensation Insurance, and on-site medical services are exempt from FBT.
  • Use of Business Property: Private use of plant and equipment on business premises and used principally for business purposes.
  • Remote Area Housing: Provided by employers in remote areas; and
  • Newspapers and periodicals used for business purposes. 


In October 2020, the Government announced the introduction of a FBT exemption for employer-provided retraining and reskilling benefits provided to redundant (or soon to be redundant) employees where the benefits may not be related to their current employment.

This exemption does not apply for retraining acquired through a salary packaging arrangement. It is not available for Commonwealth supported places at universities, which already receive a benefit and does not extend to repayments towards Commonwealth student loans. 


The FBT rebate is an entitlement to a rebate equal to 47% of the gross FBT payable, subject to a capping threshold.

Organisations that qualify for an FBT rebate are referred to as ‘rebatable’ employers.

Rebatable employers are entitled to have their liability reduced by a rebate equal to 47% of the gross FBT payable (subject to a $30,000 capping threshold).  If the total grossed-up taxable value of fringe benefits provided to an employee is more than $30,000, a rebate cannot be claimed for the FBT liability on the excess amount.

The ATO must endorse charities in order to access the FBT rebate.  Other non-profit organisations can self-assess their entitlement.

Rebatable employers are certain non-government, non-profit organisations.  Organisations that qualify for the FBT rebate include:

  • Certain religious, educational, charitable, scientific, or public educational institutions
  • Trade unions and employer associations
  • Non-profit organisations established to encourage music, art, literature, or science
  • Non-profit organisations established to encourage or promote a game, sport, or animal race
  • Non-profit organisations established for community service purposes
  • Non-profit organisations established to promote the development of aviation or tourism
  • Non-profit organisations established to promote the development of Australian information and communications technology resources; and
  • Non-profit organisations established to promote the development of Australia’s agricultural, pastoral, horticultural, viticultural, aqua cultural, fishing, manufacturing, or industrial resources. 

Capping of concessional FBT treatment for certain employers




Public benevolent institutions (other than public hospitals) and health promotion charities FBT exemption (capped at $30,000)
Public hospitals, non-profit hospitals and public ambulance services FBT exemption (capped at $17,000)
Rebatable employers – certain non-government and non-profit organisations FBT rebate (capped at $30,000)
Religious institutions FBT rebate (capped at $30,000)



Providing benefits that are income tax-deductible 

You may not have an FBT liability if you give an employee a benefit that they would otherwise have been able to claim as an income tax deduction.

Example: benefit where the employee is entitled to an income tax deduction

Kevin, the hairdressing salon manager, pays for two senior stylists to attend a hair colouring seminar run by a hairdressing association. The course, paid for by the business, is to reward the senior stylists for their work performance over the last year.

There is no FBT payable because the two employees would be entitled to a full income tax deduction for the cost of attending the course if they had paid for it themselves.

Using employee contributions 

You can reduce your FBT liability by having your employee contribute towards the cost of a fringe benefit.

The contribution is usually a cash payment made to you or the person who provided the benefit. Under the valuation rules for most categories of fringe benefits, the taxable value of a fringe benefit can be reduced by the amount of the employee contribution.

Example: employer uses employee contributions

A company ten pin bowling team has a bowling day once a month and a bowling day with clients once a quarter. The employer pays the fees of $100 a month, with the employees reimbursing the employer 75% of the fees. The employer will only have to pay FBT on the 25% of the fees that are not reimbursed.

Providing a cash bonus

If you provide your employee with a cash bonus instead of a benefit, you will not have to pay FBT, and the employee will pay income tax on the amount.

Make the most of minor FBT benefits

These items are not given frequently or regularly throughout the year and have a GST inclusive value of less than $300. Examples include bottles of wine, hampers, tickets to sporting events and shopping vouchers.

These items and other gifts can be given to staff free of FBT. An employer would generally be able to claim a full tax deduction and input tax credits in regards to these gifts. 


This Ruling which was released on 11.8.2021 explains:

  • When an employee can deduct accommodation and food and drink expenses under section 8-1 of the ITAA 1997 when they are travelling on work, including where it is necessary to apportion.
  • The fringe benefits tax (FBT) implications, including the application of the otherwise deductible rule’, where an employee is reimbursed for accommodation and food and drink expenses, or where the employer provides or pays for these expenses.
  • The criteria for determining whether an allowance is a travel allowance (as defined in subsection 900-30(3)) or a living-away-from-home allowance (LAFHA) benefit (see section 30 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)) and the differences between them.
  • Whether accommodation and food and drink expenses are deductible depends on the facts and circumstances of each case. This Ruling uses examples to show how to determine the deductibility of these expenses in a range of situations.

TR 2021/4 contains 14 worked examples which are relevant to everyday situations.