As the Fringe Benefits Tax ("FBT")
year end approaches, some subtle legislative changes are
changing employee benefits practices.
From 1 April 2007, the FBT in-house reduction increased from
$500 to $1,000. As a result many employers now encourage
employees to salary sacrifice up to $1,000 of in-house property
and residual benefits. The potential savings include; input tax
credits, payroll tax, workers compensation and PAYG.
The individual highest marginal tax threshold has increased
threefold over the past seven years to $150,000. As a result
many employers and employees are frustrated with their legacy
motor vehicle policies and novated lease arrangements that give
rise to a FBT liability, yet only delivers marginal benefit to
middle income earners. Many employers would like to unravel the
However, the answer is often as simple as incorporating an
employee contribution policy to the existing arrangement for
ALL reportable benefits, not just the novated leases. The
employee contribution strategy results in the best of both
worlds, receiving concessional treatment and the individual is
assessed at their marginal tax rate.
The adoption of an employee contribution policy provides a
disproportionate benefit to middle and low income earners. An
effective arrangement can be made for the 31 March 2008 year,
which on average provides cash of between $500 and $1,000 per
Employer Contribution To Its Employee’s Social
The ATO (ATO ID 2007/208) has confirmed our long held view
that where an employer has made a contribution to its
employees’ social club, this contribution will not be
a property fringe benefit as no particular employee has been
identified who will benefit from that contribution to the
Common Employee Benefits
Reward and recognition payments
In-house child care facilities
Food and drink consumed on employees premises
Remote area allowance
Interest on investment loans
Work related membership fees
A review of your employee benefits policy and programs
provides an important link between Human Resources and
Taxation. The objective is to ensure that your remuneration
benefits (after tax) are market competitive and
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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