Expense payment fringe benefits

Check if you provide expense payment fringe benefits to your employees, and calculate the taxable value of the benefits.

Last updated 5 March 2025

What an expense payment fringe benefit is

An expense payment fringe benefit may arise when an employee incurs an expense for their own benefit and you, as their employer either:

reimburse them for the expense
directly pay a third party for the expense.

Expense payment fringe benefits only arise from expenses your employee incurs. Goods or services you provide to an employee, or pay for with your credit card, aren't expense payment fringe benefits. In these cases the goods or services may be property fringe benefits or residual fringe benefits.

An expense payment fringe benefit may be for:

a business or private expense, or a combination of both
an expense incurred by an associate of the employee, such as their partner or relative.

Common expense payment fringe benefits

Expense payment fringe benefits include the reimbursement or payment of:

car expenses, such as registration and insurance
car parking (if you don't provide the car parking facilities)
home mortgage expenses
cost of acquiring a home desktop computer
home telephone and internet expenses
employee personal credit card payments
health insurance premiums
self-education expenses.

Exempt expense payment benefits

You don't pay FBT if the expense payment is for an exempt benefit, such as a minor benefit, portable electronic device, protective clothing or tools of trade.

Exempt benefits differ from reductions and concessions you may be able to apply to the taxable value of an expense payment fringe benefit. If the benefit is exempt, you don't need to calculate its taxable value.

What to do if you provide an expense payment fringe benefit

You need to:

work out the taxable value of the expense payment fringe benefit
keep the appropriate records
calculate how much FBT to pay
lodge your FBT return
pay the FBT amount
check if you should report the fringe benefit through Single Touch Payroll (or on your employee’s payment summary).

Taxable value of an expense payment fringe benefit

Generally, the taxable value of an expense payment fringe benefit is the amount you reimburse or pay.

We have information about the taxable value of common expenses reimbursed or paid for by employers.

Reductions and concessions

You can reduce the taxable value of an expense payment fringe benefit (or eliminate it entirely) if:

your employee could have claimed the expense as an income tax deduction, had they paid for it themselves
- this is called the otherwise deductible rule and can be used to reduce your FBT liability
- there are certain records you need to keep
your employee incurred the expense to purchase goods or services from your business – In-house expense payment fringe benefits
the benefit is eligible for an exemption or concession, such as for relocation expenses or living away from home expenses.

Records you need to keep

When record keeping for FBT, you must keep records that:

show how you calculated the taxable value of the expense payment fringe benefit
support any exemption or concession you used.

Records and the otherwise deductible rule

If you use the otherwise deductible rule, you must have certain documents to demonstrate the extent to which the expense would be deductible to the employee. This is a substantiation requirement. They may include a travel diary kept by the employee or an employee declaration.

Or, you can choose to rely on FBT alternative record keeping for expense payment fringe benefits as detailed in the LI 2024/6 legislative instrument and LI 2024/6 explanatory statement.