Property fringe benefits

What is a property fringe benefit?

For fringe benefits tax (FBT) purposes, property includes:

• goods, such as items of clothing or a television
• real property, such as land and buildings
• financial assets, such as shares, bonds or crypto assets.

This does not include any property that is specifically included within another fringe benefit type, such as cars, or food provided for entertainment purposes.

Exempt property benefits

You do not pay FBT on:

• food you provide to your employee that they consume on your business premises on a working day - see FBT guide: 17.9 Exempt property benefits
• goods you provide to your employees to help them during COVID-19
• payments to worker entitlement funds, provided they meet specific conditions
• property that is exempt from FBT, such as some work-related items – see Exemptions, concessions and other ways to reduce FBT.

What to do if you provide a property fringe benefit

You need to:

1. work out the taxable value of your property fringe benefit
2. calculate how much FBT to pay
3. lodge your FBT return
4. pay the FBT amount
5. check if you need to report the fringe benefits amount through Single Touch Payroll (or on your employee’s payment summary).

Taxable value of a property fringe benefit

How you calculate the taxable value of a property fringe benefit depends on whether it is an:

• in-house property fringe benefit
• external property fringe benefit.

In-house property fringe benefits

In-house property fringe benefits are goods that are identical or similar to goods your business sells. The benefit must consist of goods, and not real estate, buildings or shares.

Salary-packaged benefits

If you provide a property fringe benefit to your employee under a salary packaging arrangement, the benefit's taxable value is the amount your employee could expect to pay for the property at market value.

Non-salary packaged benefits

If the property is goods that you purchased for resale in your business, the taxable value is the lesser of:

• the arm’s length purchase price of the goods
• the market value of the goods.

If the property you provide is goods that your business manufactured or processed for sale to:

• manufacturers, wholesalers or retailers, the taxable value is the lowest arm's length selling price at the time you provide the goods
• the general public, the taxable value is 75% of the lowest selling price you charge the public.

For all of the above, the taxable value is reduced by any employee contribution.

For more information about calculating the taxable value, see FBT guide: 17.3 Taxable value - in-house property fringe benefits.

External property fringe benefits

An external property fringe benefit is property that:

• you don't sell in the ordinary course of your business, or
• is not a 'good' – for example, real estate or a financial investment.

If you paid for the property in an arm's length transaction, the benefit's taxable value is generally what it cost you, less any employee contribution.

For more information about calculating the taxable value, see FBT guide: 17.4 Taxable value - external property fringe benefits.

Reductions and concessions

The taxable value of a property fringe benefit is reduced (or eliminated entirely) if either:

• your employee could have claimed the cost of the property as an income tax deduction, had they purchased it themselves – this is called the otherwise deductible rule
  • you must get an employee declaration that states the extent to which the property would have been deductible
   
• the benefit is eligible for a concession.

What to do if you give your employees property fringe benefits, such as physical goods, real estate or shares.