Assessing fringe benefits for family assistance and Paid Parental Leave scheme payments 007-07080020

The fringe benefits tax assessment year is from 1 April to 31 March.

A separate procedure applies for assessing fringe benefits for Social Security payments.

This means, for example, fringe benefits received from 1 April 2017 to 31 March 2018 will appear on an employee's payment summary for the 2017-18 financial year.

For Family Tax Benefit (FTB) and Child Care Subsidy (CCS), customers should update their income estimate once the fringe benefit tax year ends on 31 March.

Paid Parental Leaveclaimants must advise reportable fringe benefits during the claiming process when estimating their income.

Ask the customer to advise the gross reportable fringe benefit amount, per the payment summary from their employer. They should include any reportable fringe benefits from an exempt employer (as a separate amount).

From 1 January 2017, this formula will be automatically applied to the gross exempt reportable fringe benefits amount. All other reportable fringe benefits will be assessed at the gross amount (100%).

The new method of assessment for the total of fringe benefits is:

• adjusted fringe benefit total = other reportable fringe benefits + [(1- fringe benefit tax rate) x exempt reportable fringe benefits]

For assessments prior to 1 January 2017, the system automatically adjusts the total reportable amount (amount on payment summary) to the net amount so the income tests can be applied:

• adjusted fringe benefits = (1 - fringe benefits tax rate) x reportable fringe benefit amount

From 1 April 2017, the fringe benefit tax rate changed. This impacts the estimated and actual income used for FTB, CCS and PPL for the 2017-18 financial year onwards.

The change in rate will impact the 6 month income estimate for SBP claims if the 6 month period starts on or after 1 April 2017. Go to Item 5.

When a person lodges an income tax return for the financial year, the Australian Taxation Office (ATO) will include the gross fringe benefit amount in actual income details it transfers.

See the Resources page for example.

If the estimate is provided for:

• the current financial year, in most cases the Family Income and Choices workflow is used to record either (or both) the gross amount of exempt reportable fringe benefit or the other reportable fringe benefit for the customer (and their partner)
• The gross amount of fringe benefits must be recorded. The system will apply the adjustment to exempt reportable fringe benefits
• For CCS only customers, information is to be recorded on the FAO Taxable Income (FTI) table in Process Direct. See Updating income estimates for the current financial year
• a previous year, view and record the gross reportable fringe benefit amount on the FAO Income for Previous Year (FIPY) screen. See Recording or updating estimate for previous year

At reconciliation or for a previous year lump sum claim, income assessment details can be viewed on the FAO Income Component Summary (FICS) screen. This screen will display the adjusted fringe benefit amount (if an adjustment is applicable).

FTB and FTB+CCS customers

To manually code the estimated reportable fringe benefit amount for the current financial year, go to the FAO Fringe Benefit (FFB) or Exempt Fringe Benefit (FFBE) screen from the FAO Income Task Selector (FITS) screen.

If an FFB or FFBE screen does not exist for the current financial year, type 'I'nsert in the Action: field and press [Enter]. Then code the relevant year in the Financial Year: field.

'C'orrect a line only if the details were incorrectly coded.

'D'elete a line only if the details should not have been recorded on the customer's record. To add a new line, code the following fields for the customer or partner:

• Event Date - for a new FTB claim, the date of commencement, otherwise, the date the customer notified
• Amt A$ - the gross (non-adjusted) estimated exempt reportable fringe benefits or reportable fringe benefits amount in Australian dollars
• Type - 'EST'imate
• From - 'CUS'tomer
• Code DOR: and Source: fields
• Press [Enter] to confirm details

CCS only customers

Income is recorded in Process Direct. Go to the FAO Taxable Income (FTI) screen:

• Select Add
• Start Date - the date the customer notified of the change
• Income Source - defaults to Customer Provided
• Exemption Reportable FB - enter the gross (non-adjusted) estimated exempt fringe benefits in Australian dollars
• Other Reportable FB - enter the gross amount of other reportable fringe benefits in Australian dollars
• Financial Year - select the relevant year. For example, select 2020 for the 2019/20 financial year
• Update any other income fields as advised by the customer (i.e. taxable income, foreign income, net investment losses etc)
• Select Save then Assess
• Complete the Update Header Data - Receipt Date and Channel and select Save
• Select Finalise

Note: if the customer is partnered, and their details require updating, select the partner from the Relationship menu and update the FAO Taxable Income table with income details as above.

For CCS purposes, the new income estimate will take effect from the start of the next CCS fortnight.

Advise the customer of their new CCS subsidy percentage as a result of their updated income estimate.

The estimate must include all exempt reportable fringe benefits and other reportable fringe benefits the customer (and their partner on the date of the claim) expects to receive during the 6 month period beginning on the day the stillborn child was delivered.

A manual calculation of adjusted fringe benefits may be required if the customer includes reportable fringe benefits in their estimate for the following 6 month periods starting:

• on or after 1 April 2015 to 30 June 2015 - as the system will apply the same fringe benefit tax rate used for FTB for the full 2014-15 financial year, instead of the increased FTB rate that applies from 1 April 2015, or
• on or after 1 April 2017 to 30 June 2017 - as the system will apply the same fringe benefit tax rate used for FTB for the full 2016-17 financial year, instead of the decreased FTB rate that applies from 1 April 2017

If updates to the record are required, see Processing claims for Stillborn Baby Payment (SBP).

For a Parental Leave Pay (PPL) claim, the customer’s income estimate must include all exempt reportable fringe benefits and other reportable fringe benefits received during the financial year preceding the date of claim or the child's date of birth/adoption the date the child was born or entered care, whichever is earlier to meet the PPL income test.

For children born or adopted before 1 July 2023, the PPL income test is based on the estimate of the customer’s income only, and does not include their partner’s income estimate.

Secondary and tertiary claimants need to give an estimate when they claim PPL. For example, after the primary claimant returns to work, or after the death of the primary carer/claimant.

For children born or adopted on or after 1 July 2023, a family income may apply, in addition to the individual income test. If the customer does not meet the individual income test, then the family income test limit is applied. This applies to both single and partnered customers.

See Paid Parental Leave income test and previous financial year income estimate.