An expense payment benefit for work-related expenses, private expenses or a combination of both arises in either of the following two ways.

Either:

• the University reimburses an employee or associate for expenses incurred by them
• the University pays a third party in satisfaction of expenses incurred by an employee or associate.

Calculation of expense payment fringe benefit

The taxable value is the amount of the payment made by the University reduced by:

• any amount which an employee contributes to the University for part of the benefit (refer to FBT overview for the GST implications of an employee making an employee contribution)
• the otherwise deductible rule.

Otherwise Deductible Rule: The taxable value of a fringe benefit is reduced by the amount of the one-off tax deduction that the employee would have been entitled to had he/she paid the amount himself/herself.

Exempt expense payment benefits

The following benefits are exempt from FBT:

1. Reimbursements of tax deductible expenses. (Note: a no-private-use declaration is required.)
2. Expenses which an employee incurs on their accommodation and any spouse and children normally living with them, solely because the employee is required to live away from his/her usual place of residence to carry out his/her employment duties. (Note: A living-away-from-home declaration is required.)
3. Reimbursement of car expenses on a cents-per-kilometre-travelled basis. The payment to the employee will be included in his/her assessable income and the employee is eligible to claim any offsetting deductions provided the substantiation requirements are met.
4. Membership fees and subscriptions, and eligible work-related items. Examples of eligible work-related items include:

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Declaration forms

Before a reduction in the taxable value of an expense payment fringe benefit is allowable employees must provide a written declaration to the University stating the otherwise tax-deductible nature of the expenditure.

One of the following declarations is required:

• No private usage declaration – where an employee receives reimbursement of a wholly tax-deductible employment related expense.
• Recurring declaration – the percentage of allowable deduction is less than 100 per cent and the University reimburses the identical expense over a number of years. This declaration may apply to cover benefits received over a five-year period as long as the tax-deductible percentage does not vary from year to year by more than 10 per cent.
• General declaration – required in all other circumstances where some tax-deductible expense is reimbursed by the University.
• Living-away-from-home declaration – this applies where the University reimburses the employee for the lease rental while the employee is living away from home.

Higher Education Loan Program (HELP)

There were four schemes under the Higher Education Funding Act 1988 that offered Commonwealth loans to assist students to pay their higher education fees. On 1 January 2005 the four schemes were replaced by three new schemes (HECS-HELP, FEE-HELP and OS-HELP) that were introduced under the Higher Education Support Act 2003.

The three new schemes are part of the Higher Education Loan Programme (HELP) and offer Commonwealth loans to assist students to pay their higher education fees and to study overseas. From 1 June 2006, all existing HECS debts become accumulated HELP debts.

An expense payment fringe benefit will arise where the University pays or reimburses the employee, or an associate of the employee, any part of his/her HECS-HELP or FEE-HELP loan repayments.

Full-fee-paying courses may qualify for concessional FBT treatment as an in-house residual fringe benefit where provided in-house, and/or where the "otherwise deductible" rule applies. The "otherwise deductible" rule could be applied for staff studying postgraduate courses, and paying upfront fees through FEE-HELP, provided a 100 per cent business use declaration was completed and the study related to the staff member's current area of work.

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Airfares

Airline tickets may be paid for by the University for its staff to attend study courses, seminars or conferences on trips which are admittedly business trips but which also have a component which is devoted to non-business pursuits, such as a holiday.

Provided that the staff member pays for their own costs (meals, accommodation) for that part of the trip that is non-business, the accepted view is that if the predominant purpose of the trip is business-related, the airline ticket will not be subject to FBT, notwithstanding a non-business portion of the trip.

The predominant purpose of the trip can be determined by considering the following:

• whether the staff member would have still gone on holiday had they not been sent with work
• whether the time spent on non-business pursuits is excessive (for example, the conference lasts for two days but the staff member then spends two months holidaying).

Of course, if the costs of the non-business part of the trip (meals, accommodation) are paid for by the employer, then FBT liability will apply on those benefits provided.

If any other person accompanies travel (spouse/child) and the University pays for the travel costs, this will be subject to FBT.

Gross-up factors

Owing to the GST, it will be essential to determine which gross-up factor will apply to an expense fringe benefit. Refer to the following table which will assist in determining which gross-up factor applies.

Expense payment fringe benefits

FBT gross-up factor to apply for calculating the grossed-up taxable value for FBT expense payment liability calculations.

Is the employer/provider making any input taxed supplies?

Yes

No Input Tax Credit for fringe benefits that are referable to input taxed supplies.
Type 2 gross up rate = 1.8692

No

Is the expense payment FBT-exempt or wholly otherwise deductible?

Yes

No FBT

No

Input tax Credit available for all expense payment fringe benefits
Type 1 gross up rate = 2.0647

Related forms

This declaration is to be used where an Expense Payment Benefit has been provided to an employee. Once completed, the form is to be submitted to FS-Tax for review

Single expense payment declaration [PDF, 990.6 KB]
Updated 21 Sep 2017

This declaration is to be used where multiple Expense Payment Benefits have been provided to an employee during the same FBT year. Once completed, the Authorisation Summary and individual declarations are to be printed and submitted to FS-Tax for review.

Multiple benefits expense payment declaration [XLS, 404.0 KB]
Updated 9 Sep 2014