Assessing fringe benefits for Social Security income test purposes 108-05020040

Is this a personal superannuation salary sacrifice arrangement, or a salary sacrifice to purchase a fringe benefit?

• Yes, this procedure does not apply
  • See Assessing salary sacrificing/salary packaging arrangements for employment income, or
  • Youth Allowance (YA) and ABSTUDY Parental Income Test (PIT) reviews
• No, go to Step 2

Where a customer and/or their partner receive a fringe benefit as part of their employment income that is paid in addition to a wage or salary, the non-grossed up amount is assessed as income for income support payments.

A separate procedure applies for assessing fringe benefits for family assistance and Paid Parental Leave scheme payments.

If advice of the fringe benefits is reported:

• through Single Touch Payroll (STP), go to Step 3
• through non-STP advice, go to Step 6

Any Reportable Fringe Benefits Amount (RFBA) reported by an employer via STP will:

• pre-fill as the grossed-up amount in a customer’s self service reporting channel, or
• pre-fill as the grossed-up amount on the EMGI screen in the Earnings and Reporting workflow in Process Direct
• need an adjustment to the start and end date of the employer pay period, if necessary, to reflect the period they’ve had access to the RFB value pre-filled
• if accepted, automatically be adjusted to the non-grossed-up amount by the system and the adjusted figure will be recorded on the EAPP table/screen

Note: Employers may report RFBA for the full year as a lump sum through STP for taxation purposes, sometimes in addition to reporting the fringe benefit throughout the year.

• Fringe benefits must be assessed from when the person first receives/has use of the benefit
• Lump sum amounts pre-filled through STP should not be assessed as income unless:
  • The person actually receives the benefit as a lump sum, or
  • The amount was taken into account as salary sacrifice throughout the FBT year. Only the amount of RFBA that exceeds the grossed-up amount of salary sacrifice already assessed should be accepted.

Go to Step 4.

For fringe benefits reported though STP, a separate employer entry on the EAPP table/screen is not required.

Customers will be also asked whether Free or Discounted Accommodation is included in the Reportable Fringe Benefit amount.

• If they answer “Yes”, the amount per fortnight is requested
• This amount is exempt income and is 100% excluded from the final calculation

See Recording and correcting employment income details for assistance with finalising the Earnings and Reporting workflow.

Go to Step 9.

Is the fringe benefit free or discounted accommodation provided by the person’s employer?

• Yes:
  • The value of the free or discounted accommodation is not assessed as income for social security purposes
  • If a cash payment is provided for the purpose of paying accommodation costs, this is considered ordinary employment income and is not classed as free or discounted accommodation
  • Procedure ends here
• No, go to Step 6

Ask the customer and/or their partner to provide evidence of their fringe benefits (reportable and non-reportable). This could be in the form of:

• a letter from the employer
• a payment summary that reflects the current arrangement
• their latest individual income tax return

The letter must state either the non-grossed-up or grossed-up amount of fringe benefits.

• The non-grossed-up amount is the actual cost to the employer of providing the fringe benefit
• The grossed-up amount is the amount that would have been received in salary to pay for the benefit received in after tax dollars
• A person's payment summary (group certificate) shows the reportable fringe benefits total, only if the non-grossed-up amount is more than $2000 ($1000 before 1 July 2007)

Note: the information provided on a payslip varies from employer to employer. A payslip may:

• show gross taxable income
• not include fringe benefits amounts

See Requesting information (CLK) if more verification is required and procedure ends here until the documents are provided.

If a customer or their partner received fringe benefits from a private company or private trust in which they are involved, see Trusts and companies assessment.

Has the customer or their partner provided evidence that lists the non-grossed-up amount of fringe benefits received?

• Yes, go to Step 8
• No, go to Step 7

If the customer and/or their partner has provided a payment summary or other evidence with the grossed-up amount of fringe benefits, calculate the non-grossed-up amount using the method below:

Non-grossed-up amount = grossed-up amount x (100% - Fringe Benefit Tax rate).

See the Resources page for examples

Go to Step 8.

Service Officers must code receipt of the fringe benefit component as a separate employer (even if received from the same employer):

• Clearly identify the fringe benefit in the Description on the EAPP table/screen
  • For example, 'Fringe benefit work car'
• The fringe benefit amount must not be included with any other variable/ongoing income from employment
• Do not record an ABN for the separate employer

Review the following information before completing coding:

Event Date

The event date is the date the customer begins to have use of the benefit. This could be either:

• The start of the fringe benefit tax year (1 April) for ongoing benefits
• The employee’s regular pay day for benefits paid periodically on top of an employee’s salary
• Another day from which the employee first begins to have use of the benefit for fringe benefits provided in a one-off or irregular way

Amount

The amount is the non-grossed-up fringe benefit figure as calculated at Step 7.

• Ensure the amount matches the frequency selected
• For example, if the verification shows an annual amount but the benefit is provided periodically each fortnight, a fortnightly equivalent of the annual amount should be recorded.

Frequency

The frequency will depend on the way in which the fringe benefits are provided, the period the fringe benefits represent and the length of the entitlement period that they are provided in.

• If the fringe benefits are provided in a one-off or irregular way, they are treated as a remunerative lump sum, see Treatment of lump sums for more information
  • For Example, a yearly sporting club membership is provided as a fringe benefit on top of an employee’s salary
  • The period the fringe benefit represents is 1 year
• If the fringe benefit are provided periodically the period they represent will match the periodic frequency in which they are provided
  • For example, an entitlement fringe benefit is provided each fortnight in addition to the employee’s salary
  • The benefit provided each fortnight represents a period of 14 days

See Recording and correcting employment income details for assistance with coding.

Go to Step 9.

Record details of the fringe benefit received and the assessment method used in a display on access DOC using reason NSE – non-standard earning assessment. See Creating, reviewing and deleting documents (including Fast Notes and DOA DOCs) if assistance is required.

If the customer is a statement reporter, ensure they are aware of the correct amount of gross income to report each fortnight, for both their employment income and fringe benefits received.

For customers receiving family assistance, check their annual income estimate is reasonable and request a revised estimate, if necessary.

Procedure ends here.