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 taxable value is the amount of the payment made by the University reduced by:
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.
The following benefits are exempt from FBT:
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:
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.
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:
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.
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.
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?
No Input Tax Credit for fringe benefits that are referable to input taxed supplies.
Type 2 gross up rate = 1.8692
Is the expense payment FBT-exempt or wholly otherwise deductible?
Input tax Credit available for all expense payment fringe benefits
Type 1 gross up rate = 2.0647
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
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.