GLOBAL PAYROLL MAGAZINE
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Reportable Fringe Benefits The Reportable Fringe Benefit (RFB) regime was introduced on 1 April 1999 to allow for full reporting of an individual’s employee cash salary and non-cash fringe benefit remuneration. One of the key outputs from FBT Return preparation is individual employee RFB amounts. Where an employee receives more than $2,000 in RFBs within an FBT, the employer is required to report the grossed-up value of the fringe benefits on the employee’s annual income statement. All fringe benefits are reportable unless they are excluded. The key exclusions are: 1. Exempt benefits (excluding exempt Electric Vehicles) 2. Meal Entertainment (unless Salary Packaged) 3. Entertainment Facility Leasing (unless Salary Packaged) 4. Car Parking 5. Certain Remote Area Benefits 6. Pooled or Shared Cars An interesting reporting quirk can occur due to the different year ends for FBT and Income. If an employee’s employment is terminated between say 1 April 2024 and 30 June 2024 , then any reportable fringe benefits received in that period will need to be reported on the employee’s 2025 income statement. Salary Packaging and Employee Contributions Salary Packaging is a very popular flexible remuneration tool that employers may offer to their employees. It provides an opportunity for
employees to sacrifice future salary in exchange for non-cash fringe benefits. Commonly Salary Packaged benefits
include motor vehicles (novated leases and associate leases), car
parking, portable electronic devices, relocation expenses and remote area benefits, in-house child care and recreational facilities, and airline lounge memberships. Salary Packaging can cause headaches for both Payroll and FBT. Often the Salary Packaging is outsourced, requiring good lines of communication and from an employer perspective the need for approval processes and careful checking of payroll deduction amounts. Salary Packaging can comprise pre- tax deductions (Lease Payments and Running Costs) and post-tax deductions. The latter known as Employee Contributions (EC), are determined based on the salary packaged fringe benefit taxable value, with the most common example being a Novated Lease. For a sedan motor vehicle, the taxable value is based on the Cost Price (including GST but excluding Stamp Duty and Registration) of the motor vehicle, multiplied by a statutory fraction of 20%. For example: $30,000 motor vehicle x 20% = $6,000 Taxable Value (based on a full FBT year). The purpose of an employee making an EC is to reduce the Taxable Value to nil. Therefore, in this example, the employee must contribute by way of a post-tax EC $6,000 in order to reduce the Taxable Value to nil.
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