If the taxable value of certain fringe benefits
received by an employee in an FBT year exceeds $2,000, the
grossed-up taxable value will be recorded on the employee’s annual Income Statement
(or Payment Summary) for the corresponding Income Tax year. This
is known as the Reportable Fringe Benefits Amount (RFBA). You do not pay Income
Tax or Medicare Levy on the RFBA.
For the reporting and calculation of RFBA, the lower gross-up factor (1.8868) is
applied to all benefits, regardless of whether the benefit is a Type 1 or Type 2
benefit. Some benefits may not be reportable if they are:
- FBT Exempt (Employer-Provided Childcare, Otherwise Deductibles Expenses etc.)
- Excluded Benefits (Remote Area Housing Benefits)
- Have nil taxable value due to RCM (Novated Leasing using RCM)
The RFBA from your salary packaging arrangement may affect your eligibility or level
of Government or family benefit payments and obligations for certain levies. However
this may not be negative, as salary packaging can result in secondary indirect benefits
by increasing your eligibility for some payments, or reducing your eligibility for
others.
Although included on your Income Statement, RFBA is not subject to Income Tax or the Medicare Levy.
However it may be included in a number on income tests such as:
- Medicare Levy Surcharge
- Entitlement to Private Health Insurance Rebate
- Family Assistance Payments
- Deductions for personal super contributions
- Super co-contribution
- Tax offset for contributions to your spouse's super
- Higher Education Loan Program (HELP) and Financial Supplement repayments
- Your child support obligations
- Your entitlement to certain income-tested government benefits
The RFBA is also taken into account in the income tests for the family tax benefit
and child care benefit, and for the parental income test for the youth allowance.
Please visit the
ATO and
Centrelink websites for further information.
The RFBA from your salary packaging arrangement may affect the amount you must pay
at the end of the financial year towards the Higher Education Loan Program (HELP)
or Financial Supplement repayments (formerly HECS).
If you have a HELP or Financial Supplement debt, you must start repaying it when
your repayment income is above the minimum threshold for compulsory repayment. As
determined by the ATO, your Help Repayment Income (HRI) is the sum of the following
amounts obtained from your income tax return:
- your taxable income
- reportable fringe benefits (as reported on your Payment Summary)
- total net investment loss (which is the sum of your net financial investment loss
and net rental property loss)
- reportable super contributions (which is the sum of your reportable employer super
contributions and deductible personal super contributions)
- any exempt foreign employment income amounts.
You will not have to make compulsory repayments if you have a spouse or dependants
and if, due to low family income, you:
- are entitled to a reduction of the Medicare levy
- do not have to pay the Medicare levy.
Note: Your employer will generally deduct HELP/HECS based on your taxable income
(after salary packaging deductions) throughout the year. Therefore, when your RFBA
is reported on your income tax return at the end of the Income Tax year, there may
be a shortfall between the final amount of repayments due and the amount paid by
your employer throughout the year.
Your employer is entitled to claim the refund of the GST paid on benefits included
in your salary package, provided your employer is registered for GST. The refund
of GST is known as an Input Tax Credit (ITC), which your employer may elect to pass
back into your salary package. If your employer chooses to do so, then your salary
package is effectively GST-free.