Fringe benefits include the value of any employer provided benefit received during the base tax year. An employer provided benefit is any right, privilege, service, in kind payment or facility that an employee receives (or assigns to someone else) from their employment.
Employees may 'sacrifice' an amount of their cash salary and receive the value of the amount as a fringe benefit. In other cases, a fringe benefit may be a fixed part of the employee's salary package.
Common forms of salary sacrifice or fringe benefits include:
- leasing of vehicles;
- extra superannuation contributions;
- investments;
- expense benefits;
- housing assistance; and
- low interest loans.
As the value of the benefit is not recorded as salary for the employee, they do not pay income tax on that amount. Instead, the employer pays fringe benefits tax (FBT) on the value of the benefit.
The amount to be declared is the 'Reportable fringe benefits total' as reported on the employee's group certificate. The reportable fringe benefit is used for the purposes of the AIC Sheme parental income test.
The employer is now responsible for reporting fringe benefits on an employee's group certificate. The amount that is reported on the group certificate is the grossed-up value of the fringe benefit and is referred to as the 'reportable fringe benefit total'.
Fringe benefit tax rate
The FBT rate is the fringe benefits tax rate set by the Fringe Benefits Tax Act 1986. It is the highest marginal tax rate including the Medicare levy. The FBT rate for the FBT year ending 31 March 2006 is 48.5 per cent.
A fringe benefits
tax year runs from 1 April to 31 March. Where applicants elect to give an employer statement of the value of their fringe benefits, the relevant fringe benefits tax year is the one completed in the relevant year of income. So, for example, for a 2007 AIC Scheme assessment, the relevant year of income will ordinarily be 2005/2006. The relevant fringe benefits year will be the one that ended on 31 March 2006. The exception to this is current income based assessments (see
6.7).
The first $1,000 of reportable fringe benefits is exempt from the parental income test. Reportable fringe benefits in excess of $1,000 appear on an employee's Group Certificate. The reportable fringe benefits will be reduced by the maximum tax rate and the adjusted fringe benefits will be added to the parental income.
In respect of the reportable fringe benefits, the assessable value of such is normally measured against the fringe benefit tax accounting period (1 April to 31 March) ending prior to the year for which assistance is sought. This may vary if current income assessment applies (see 6.7). The reportable fringe benefits total is found on the group certificate provided by the employer.
Where an applicant or their partner is working overseas and getting any fringe benefits listed in 6.6.5, the Australian equivalent (see 6.2.16) of the value of the benefits is to be included.
The types of fringe benefits include but not limited to:
- car fringe benefits;
- debt waiver benefits;
- loan fringe benefits;
- expense payment fringe benefits;
- housing fringe benefits;
- living-away-from-home allowance benefits;
- airline transport benefits;
- board fringe benefits (certain meals);
- car parking fringe benefits;
- property fringe benefits;
- residual fringe benefits.
Reporting fringe benefits is the responsibility of the employer. If further information is required in regard to fringe benefits, the employee should seek advice from the employer or the Australian Taxation Office.
Ministers of religion are treated the same as any other employee for the purposes of assessing adjusted fringe benefits.
The assessment of adjusted fringe benefits for ministers of religion is also based on the grossed fringe benefit recorded on their group certificate. Certain benefits received by ministers of religion are exempt under section 57 of the Fringe Benefits Tax Assessment Act. These benefits will not appear on their group certificate, and therefore will not be assessed as adjusted fringe benefits.