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

Reportable fringe benefits are fringe benefits that must be reported to the Australian Taxation Office (ATO). This is done by the customer's employer, on the employee's Payment Summary. It is a 'grossed-up' figure calculated by the employer.

Customers must advise Services Australia the full amount of all reportable fringe benefits. This includes any exempt reportable fringe benefit amounts as a separate figure. Only reportable fringe benefits, as reported on their Payment Summary (which will include any exempt reportable fringe benefits) are assessed as part of the customer's ATI.

Fringe benefits received by Ministers of Religion are assessed in the same way.

If a person is not sure whether a benefit they receive from their employer is a fringe benefit they should check with their employer or the ATO.

When the person lodges an income tax return for the financial year, the ATO transfers actual income details to Services Australia. This includes details of any reportable fringe benefit amounts. From the 2016-17 financial year onwards this data exchange includes details of any exempt reportable fringe benefits.

From 1 January 2017, exempt reportable fringe benefits and other reportable fringe benefits are assessed differently. As a result there are two fields for reportable fringe benefits, the exempt reportable fringe benefit amount field and the other reportable fringe benefit amount field.

The adjusted fringe benefit amount for a customer is the total of both the reportable fringe benefit amount fields, being:

• Exempt reportable fringe benefits from certain not for profit employers (as described in Section 57A of the Fringe Benefits Tax Assessment Act 1986). Exempt fringe benefits will have fringe benefits tax rate formula automatically applied to reduce the value of the grossed up amount on the recipients Payment Summary, and
• All other reportable fringe benefits from (non-exempt) employers. These reportable fringe benefits will be assessed at 100% of value (the grossed up amount as it appears on the recipients Payment Summary)

If a person is not sure whether the reportable fringe benefits they receive are from a not for profit employer (as described in Section 57A of the Fringe Benefits Tax Assessment Act 1986) and therefore classed as exempt reportable fringe benefits, they should check with their employer's payroll area.

Prior to 1 January 2017 the total grossed up reportable fringe benefit amount was automatically adjusted by the system to take into account the fringe benefits tax rate. This reduced amount was then used in the recipient's income estimate. From 1 January 2017 onwards this adjustment is only made to exempt reportable fringe benefits.

If the value of the customer's total fringe benefits is under the relevant ATO fringe benefits threshold they will not have a reportable fringe benefit amount. If the customer includes a fringe benefits amount in their income estimate which is under the relevant ATO fringe benefits threshold, the amount (the total of exempt and other reportable fringe benefits) will be treated as nil in the customer's estimate of income. The ATO website provides information about reportable fringe benefits thresholds. The Resources page contains a link to the ATO website and examples of assessing fringe benefits.

The fringe benefits tax rate and threshold changed from 1 April 2017. This change impacts adjusted taxable income for the 2017-18 financial year onwards.

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

The fringe benefits tax assessment year is from 1 April to 31 March. This means, for example, reportable 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.

Customers should update their income estimate for FTB/CCS once the fringe benefit tax year ends on 31 March. They should confirm with their employer the reportable fringe benefit total that will appear on their payment summary. PPL claimants must advise reportable fringe benefits during the claiming process when estimating their income.