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

Alice estimates the total value of the other reportable fringe benefit for the next financial year as $6,000.

The Service Officer confirms with Alice $6,000 is the amount that will appear on Jo's payment summary for the 2019-20 financial year.

The amount of $6,000 is coded on Alice's record for the 2019-20 financial year.

The adjusted fringe benefit amount will be 100% of the reportable fringe benefit, that is, $6000, and will impact Alice's entitlement for the 2019-20 financial year.

Zena has confirmed with the employer's payroll area, the employer is eligible for a fringe benefit tax exemption under Section 57A of the Fringe Benefits Tax Assessment Act 1986.

The Resources page contains a link to the ATO website for information on exempt reportable fringes benefits.

For the period 1 July 2018 - June 2019: Adjusted fringe benefit amount = fringe benefits x (1- fringe benefit tax rate).

The fringe benefit tax rate for 2019-20 is 47%, so the adjusted fringe benefit amount used to work out Ahmad's Family Tax Benefit (FTB) rate for 2019-20is:

= $12,500 x (1 - 0.47)

= $12,500 x 0.53

= $6,625

When recording the estimate, customers and Service Officers must record the full non-adjusted amount of $12,500. The system will then adjust this amount to $6,625.

Rose believes it would cost $2,100 to receive the same health cover if paid for independently.

The Service Officer advises Rose to check with the employer as the reportable fringe benefit amount (the amount that will appear on Rose's payment summary) will be higher than the cash value - that is, it will be the grossed-up amount. If $2,100 is recorded as the reportable amount, the customer may have to repay Family Tax Benefit (FTB) after the end of the financial year.

Rose rings back the next day to say the grossed up amount of other reportable fringe benefit amount will be $3,950.

This amount is coded on Rose's record.

The fringe benefit amount taken into account in the assessment of the total adjusted taxable income (ATI) will be 100% of the reportable fringe benefit, that is, $3,950.

Alaine has estimated the value of the exempt reportable fringe benefits as $4,500 and $5,000 for other reportable fringe benefits, a total of $9,500.

The Service Officer confirms with Alaine that $4,500 and $5,000 are the amounts that will appear on the payment summaries for the 2016-17 financial year. The amounts of $4,500 and $5,000 are coded on Alaine's record for the 2016-17 financial year, as 'exempt reportable fringe benefits' and 'reportable fringe benefits' respectively.

For the period 1 July 2016 to 31 December 2016, the amount of $9,500 will be assessed as one sum = (exempt reportable fringe benefits + all other reportable fringe benefits) x (1 - fringe benefit tax rate).

The fringe benefit tax rate for 2016-17 is 49%, therefore the adjusted fringe benefit amount used to work out Alaine's Family Tax Benefit (FTB) rate for the period 1 July 2016 to 31 December 2016 is:

=$9,500 x (1 - 0.49)

=$9,500 x 0.51

=$4,845.00

For the period 1 January 2017 to 30 June 2017, the adjusted fringe benefit amount is automatically calculated from the two amounts recorded.

The reportable fringe benefit will be assessed at 100% = $5,000.

The exempt reportable fringe benefit amount will be assessed as: Exempt reportable fringe benefits x (1 - fringe benefit tax rate):

The fringe benefit tax rate for 2016-17 is 49%, therefore the adjusted fringe benefit amount used to work out Alaine's Family Tax Benefit (FTB) rate for the period 1 January 2017 to 30 June 2017 is:

=$4,500 x (1 - 0.49)

=$4,500 x 0.51

=$2,295.00

Total Adjusted fringe benefit amount = $7,295 ($5,000 + $2,295).

The customer's FTB rate for 2016-17 will be calculated using different ATI, based on the fringe benefit assessment changes, for the two 6 month periods.

Sarah's stillborn child was delivered on 26 January 2018, so the income estimate is for the 6 month period starting 26 January 2018.

Sarah receives fringe benefits from two employers, one of which is an employer eligible for a fringe benefit tax exemption under Section 57A of the fringe benefits tax Assessment Act 1986.

Sarah's total income estimate of $61,000 includes exempt reportable fringe benefits of $2,500 and other reportable fringe benefits of $3,000 (so the total is made up of $55,000 plus $5,500 of fringe benefits).

When recording the estimate, the gross non-adjusted amount must be recorded.

The system will automatically calculate Sarah's entitlement from the input amounts, for the 6 month income estimate period:

Total adjusted fringe benefits = [Exempt reportable fringe benefits x (1- fringe benefit tax rate)] + other reportable fringe benefits.

=[$2,500 x (1 - 0.47)] + $3,000

=($2,500 x 0.53) + $3,000

=$1,325 + $3,000

=$4,325

Sarah's total estimated adjusted taxable income for the 6 months from 26 January 2018 is:

=$55,500 + $4,325

=$59,825

As this is still under the $62,057 limit and all other SBP eligibility criteria are met, SBP is paid to Sarah.

Clay contacted the payroll section and they have advised that the reportable fringe benefit Clay receives is exempt. Therefore, Clay is required to record the full amount as an 'exempt reportable fringe benefit' when Clay updates their income estimate. The full amount will be automatically adjusted and only 53% will be applied when calculating Clay's estimated adjusted taxable income.

If Clay advised $10,000 of 'exempt reportable fringe benefits' in their estimate of income, it will be adjusted by the system to $5,300 when working out Clay's rate of payment.

Note: customers can ask their employers to tell them the expected gross reportable fringe benefit amount. At the end of the financial year, they can find this amount on their payment summary.