An FBT exemption for fringe benefits which have a notional taxable value of less than $300 is set out in Section 58P of the FBTAA.
The $300 amount is not a deductible amount. i.e. once the threshold has been exceeded for a benefit, the full amount is subject to FBT.
The $300 limit applies to each benefit provided and is not an upper limit on the total value of minor benefits that any individual employee may receive. However it must be unreasonable to treat each minor benefit as a fringe benefit based on the factors outlined below.
Minor Benefits – Exclusions
There are some exclusions to the minor benefits exemption, and qualifying conditions.
Not exempt under the minor benefits rules are:
- airline transport fringe benefits
- expense payment, property or residual benefits which are inhouse benefits
- salary sacrifice arrangements
Tax exempt organisations providing entertainment
Tax exempt organisations may be exempt under the minor benefit rules where they
- provide entertainment
- which is incidental to the provision of entertainment to non-employees (or employee associates)
- which does not consist of (or is provided in connection with) the provision of a meal (other than light refreshments); or
- provide entertainment to an employee or associate at work premises the sole purpose of which is to recognise special employment achievements of the employee.
“Unreasonable” to be treated as a fringe benefit
An overriding qualification of the minor benefits exemption is whether treating the minor benefit as a fringe benefit would be “unreasonable”.
There are five conditions for determining “unreasonable”:
- The frequency and irregularity – the more frequently and regularly associated benefits are provided, the less likely that the minor benefit will qualify as exempt. The words ‘infrequency and irregularity’ and ‘identical or similar’ are not defined in the FBTAA and therefore take on their ordinary meaning.
- Total values – the greater the total value of similar benefits, the less likely it is a minor benefit will qualify as exempt.
- Total values of associated benefits – the greater the total value of associated benefits, the less likely it is that the minor benefit will qualify as exempt
- The practical difficulty in determining the notional taxable values or keeping records
- The circumstances – a consideration of whether the benefit was provided unexpectedly or in the nature of remuneration.
Entertainment – how to decide whether the minor benefit exemption applies
The Tax Office provides this guidance (see : Minor Benefits Exemption) for determining whether the minor benefits exemption can be applicable to a specified benefit:
- It is under $300
- It is not ‘unreasonable’ to be considered minor
- Less frequent
- Lower value
- Difficult to record or measure
- Guidance and examples see Taxation Ruling TR2007/12 – Minor Fringe Benefits
This page was last modified 2020-05-14