Property Fringe Benefits

A property fringe benefit arises when the employee is provided with free or discounted property.

“Property” includes:

  • goods (including gas and electricity, unless provided through a reticulation system) and animals
  • real property, such as land and buildings
  • rights to property, such as shares or bonds.

Taxable Value

In-house fringe benefits are goods or services received by employees which are the same as those provided to customers. In-house goods and services are concessionally valued.

Until 22 October 2012, the concessions provided that

  • the taxable value is 75% of the lowest selling price to the public or the cost of the benefit to the employer; and
  • The first $1,000 of in-house goods and services provided to employees is exempt from FBT.

Under amendments foreshadowed in the 2012 MYEFO, these concessions were removed, subject to transitional arrangements, which provide that pre-existing salary sacrifice arrangements implemented before 22 October 2012 are excluded from the new rules until 1 April 2014.

(See more here: In-house property fringe benefits)

The FBT value of a property fringe benefit depends on the type of property fringe benefit, which will be one of the following:

In-house property fringe benefits (goods only)

  • Goods manufactured or produced by the provider (see valuation rules)
    • Non-retail goods (identical)
    • Retail goods (identical)
    • Other goods (similar but not identical)
  • Goods purchased and sold as part of the employer’s business (see valuation rules)
  • Any other in-house property fringe benefits  – The taxable value is 75% of the notional or market value of the goods, reduced by any employee contribution.

External property fringe benefits

An external property fringe benefit is any property fringe benefit that is not an in-house property fringe benefit.

The taxable value is essentially either the cost or an arms length value, reduced by the amount of any employee contribution.

(See more here: External property fringe benefits)

Exempt property benefits

  • Payments to worker entitlement funds
  • Property provided and consumed on employer’s premises
  • Remote area – certain meals provided to employees in primary production

(See more here: Exempt property benefits)

Otherwise deductible rule

The taxable value of a property fringe benefit is reduced by the amount the employee would have been entitled to claim as an income tax deduction had the employee had purchased the property.

Special rules apply where you provide a property fringe benefit in relation to a car owned or leased by the employee. See Employee cars – applying the ‘otherwise deductible’ rule.  They are actually three methods of calculating the amount of the expense that hypothetically would have been income tax deductible to the employee .

  1. The first method is substantiated by means of log book records and/or odometer records.
  2. The second and third methods are substantiated by an employee declaration only (see Declarations])

Reductions in taxable value

The following reductions may apply be applicable:

  • remote area residential fuel
  • remote area housing assistance
  • relocation – meals
  • in-house fringe benefits – tax-free threshold
  • living away from home – food provided.

(See more here: Other reductions in taxable value)

Substantiation Documents (as applicable)

  • Travel diary
  • Employee declarations (see link below)
  • Recurring fringe benefit declaration – The requirement to obtain an employee declaration is waived if the provision of a fringe benefit is covered by a Recurring property benefit declaration which (subject to conditions) is valid for 5 years

(See more here: Substantiation requirements)

 

This page was last modified on 24 Aug 2017