Fringe Benefits Tax Assessment Act 1986

PART III - FRINGE BENEFITS

Division 5 - Expense payment fringe benefits

Subdivision B - Taxable value of expense payment fringe benefits

SECTION 24 REDUCTION OF TAXABLE VALUE - OTHERWISE DEDUCTIBLE RULE

24(1)

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Where:

(a)

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the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and

(b)

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if the recipient had, at the time when the recipients expenditure was incurred, incurred and paid unreimbursed expenditure (in this subsection called the gross expenditure ), in respect of the same matter in respect of which the recipients expenditure was incurred, equal to:

(i) in the case of an in-house expense payment fringe benefit - the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the expense payment fringe benefit in relation to the year of tax; or

(ii) in the case of an external expense payment fringe benefit - the amount of the recipients expenditure;

a once-only deduction (in this subsection called the gross deduction ) would, or would if not for Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of the gross expenditure; and

(ba)

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the amount (in this subsection called the notional deduction ) calculated in accordance with the formula:

GD − RD

where:
GD is the gross deduction; and
RD is:

(i) if there is no recipients portion in relation to the expense payment fringe benefit - nil; or

(ii) if there is a recipients portion in relation to the expense payment fringe benefit - the amount (if any) that would, or that would but for Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable as a once-only deduction to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of the recipients expenditure (assuming that any payment of that expenditure by the recipient had been paid by the recipient at the time when the recipients expenditure was incurred);

exceeds nil; and

(c)

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in the case of an expense payment fringe benefit that is not an eligible incidental travel expense payment benefit or an eligible overtime meal expense payment benefit:

(ia) where the recipients expenditure is in respect of fuel or oil for a motor vehicle owned by, or leased to, the recipient:

(A) where the fringe benefit is an eligible small expense payment fringe benefit or an undocumentable expense payment fringe benefit - substitute documentary evidence of the recipients expenditure is maintained by or on behalf of the provider and, if the provider is not the employer, that documentary evidence, or a copy, is given to the employer before the declaration date; or

(B) in any case - documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; or

(C) in any case - the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients expenditure; or

(i) where subparagraph (ia) does not apply and the fringe benefit is an undocumentable expense payment fringe benefit or an eligible small expense payment fringe benefit:

(A) documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; or

(B) substitute documentary evidence of the recipients expenditure is maintained by or on behalf of the provider and, if the provider is not the employer, that documentary evidence, or a copy, is given to the employer before the declaration date; or

(ii) in any other case - documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; and

(d)

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where the expense payment fringe benefit is an extended travel expense payment benefit (other than an international aircrew expense payment benefit) - the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient to which the fringe benefit relates; and

(e)

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except where the expense payment fringe benefit is:

(i) an exclusive employee expense payment benefit; or

(ia) covered by a recurring fringe benefit declaration (see section 152A ); or

(ii) an eligible overtime meal expense payment benefit; or

(iii) an eligible incidental travel expense payment benefit; or

(iv) an extended travel expense payment benefit; or

(v) a car expense payment benefit;

the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients expenditure; and

(ea)

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where:

(i) the expense payment fringe benefit is a car expense payment benefit in respect of a car held by the recipient during a period (in this section called the holding period ) in the year of tax; and

(ii) the substantiation rules set out in Division 15 have been complied with in relation to the car in relation to the holding period;

the following conditions are satisfied:

(iii) the recipient gives to the employer, before the declaration date, a car substantiation declaration for the car for the year of tax;

(iv) in a case where the substantiation rules require log book records or odometer records to be maintained by or on behalf of the recipient in relation to the car - the car substantiation declaration is accompanied by a copy of those documents; and

(f)

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if:

(i) paragraph (ea) does not apply; and

(ii) the expense payment fringe benefit is a car expense payment benefit in respect of a car held by the recipient during a period (the holding period ) in the year of tax;

the recipient gives a declaration to the employer, before the declaration date and in a form approved by the Commissioner, that purports to set out:

(iii) the holding period; and

(iv) the number of whole business kilometres travelled by the car during the holding period; and

(v) the number of whole kilometres travelled by the car during the holding period;

the taxable value, but for Division 14 , of the expense payment fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula:

TV − ND

where:

TV
is the amount that, but for this subsection and Division 14 , would be the taxable value of the expense payment fringe benefit in relation to the year of tax; and

ND
is:

(g)

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if neither paragraph (ea) nor paragraph (f) applies and paragraph (l) does not apply - the notional deduction; or

(h)

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if paragraph (ea) applies and paragraph (l) does not apply - whichever of the following amounts is applicable:

(i) if it would be concluded that the amount of the providers portion would have been the same even if the recipients expenditure were not incurred in producing assessable income of the recipient - the business use percentage of the amount that, but for this subsection and Division 14 , would be the taxable value of the expense payment fringe benefit in relation to the year of tax;

(ii) if subparagraph (i) does not apply:

(A) in the case of an in-house expense payment fringe benefit - the business use percentage of the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the expense payment fringe benefit in relation to the year of tax; or

(B) in the case of an external expense payment fringe benefit - the business use percentage of the recipients expenditure; or

(j)

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where:

(i) paragraph (f) applies; and

(ii) (Repealed by No 162 of 2015)

(iia) paragraph (l) does not apply;

whichever of the following amounts is the least:

(iii) the notional deduction;

(iv) if it would be concluded that the amount of the providers portion would have been the same even if the recipients expenditure were not incurred in producing assessable income of the recipient - 33 ⅓ % of the amount that, but for this subsection and Division 14 , would be the taxable value of the expense payment fringe benefit in relation to the year of tax;

(v) if subparagraph (iv) does not apply:

(A) in the case of an in-house expense payment fringe benefit - 33 ⅓ % of the amount that but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the expense payment fringe benefit in relation to the year of tax; or

(B) in the case of an external expense payment fringe benefit - 33 ⅓ % of the recipients expenditure; or

(k)

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(Repealed by No 162 of 2015)

(l)

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if, under subsection 138(3) , the expense payment fringe benefit is deemed to have been provided to the recipient only - the amount calculated in accordance with subsection (9) .

[ CCH Note: Legislative instruments F2024L00335 and F2024L00349 made under s 123AA of the Fringe Benefits Tax Assessment Act 1986 and effective for the FBT year ending 31 March 2025 and all subsequent years, allow an employer to which the instruments apply to accept adequate alternative records instead of the statutory evidentiary documents referred to in ss 24(1)(e) and 24(1)(d) respectively. Section 6 of each instrument sets out the adequate alternative records that can be accepted instead of the relevant statutory evidentiary document. Records can only be accepted as an alternative to the statutory evidentiary document if they are obtained and held by the employer by the employer ' s declaration date.]

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History

S 24(1) amended by No 84 of 2022, s 3 and Sch 3 items 4 - 7, by omitting " section 82A of the Income Tax Assessment Act 1936 , and " before " Divisions 28 and 900 of the Income Tax Assessment Act 1997 " from para (b), substituting " that Act or the Income Tax Assessment Act 1936 " for " either of those Acts " in para (b), omitting " section 82A of the Income Tax Assessment Act 1936 , and " before " Divisions 28 and 900 of the Income Tax Assessment Act 1997 " from para (ba) subpara (ii) of the definition of " RD " and substituting " that Act or the Income Tax Assessment Act 1936 " for " either of those Acts " in para (ba) subpara (ii) of the definition of " RD " , effective 1 January 2023 and applicable to the FBT year starting on 1 April 2023 and to later FBT years.

S 24(1) amended by No 162 of 2015, s 3 and Sch 1 items 8 - 10, by substituting para (f), repealing para (j)(ii) and para (k), applicable in relation to the 2016-17 FBT year and later FBT years. Para (f), (j)(ii) and (k) formerly read:

(f) where paragraph (ea) does not apply and the expense payment fringe benefit is a car expense payment benefit in respect of a car held by the recipient during a period (in this subsection also called the holding period ) in the year of tax - the recipient gives to the employer, before the declaration date:

(i) a declaration, in a form approved by the Commissioner, that purports to set out:

(A) the holding period; and

(B) the number of whole business kilometres travelled by the car during the holding period; and

(C) the number of whole kilometres travelled by the car during the holding period; or

(ii) where the average number of business kilometres per week travelled by the car during the holding period exceeded 96:

(A) a declaration referred to in subparagraph (i); or

(B) a declaration, in a form approved by the Commissioner, that purports to set out the holding period and includes a statement by the recipient that the average number of business kilometres per week travelled by the car during the holding period exceeded 96;

(j)(ii) a declaration referred to in subparagraph (f)(i) has been given to the employer; and

(k) where:

(i) subparagraph (f)(ii) applies; and

(ii) a declaration referred to in subparagraph (f)(i) has not been given to the employer; and

(iia) paragraph (l) does not apply;
whichever of the following amounts is applicable:

(iii) if it would be concluded the amount of the providers portion would have been the same even if the recipients expenditure were not incurred in producing assessable income of the recipient - 33 ⅓ % of the amount that, but for this subsection and Division 14 , would be the taxable value of the expense payment fringe benefit in relation to the year of tax;

(iv) if subparagraph (iii) does not apply:

(A) in the case of an in-house expense payment fringe benefit - 33 ⅓ % of the amount that, but for this Subdivision and Division 14 and the recipients contribution, would be the taxable value of the expense payment fringe benefit in relation to the year of tax; or

(B) in the case of an external expense payment fringe benefit - 33 ⅓ % of the recipients expenditure; or

S 24(1) amended by No 145 of 2008, s 3 and Sch 4 items 47 to 56, by inserting " and " at the end of paras (a), (b) and (ba), inserting " or " at the end of para (c)(ia)(A) and (C), inserting " and " at the end of paras (c)(ii) and (d), inserting " or " at the end of para (e)(i), (ia), (ii) and (iii), inserting " and " at the end of paras (e) and (f)(i)(A) and inserting " or " at the end of paras (g), (h)(ii)(B) and (j)(v)(B), effective 9 December 2008.

S 24(1) amended by No 145 of 2008, s 3 and Sch 4 items 10 to 17, by substituting all the text from (and including) " the taxable value, but for Division 14, of the expense payment fringe benefit " to " ND is: " for " the taxable value, but for this subsection and Division 14, of the expense payment fringe benefit in relation to the year of tax shall be reduced by: " , inserting " and paragraph (l) does not apply " after " applies " in paras (g) and (h), inserting " and " at the end of para (j)(ii), inserting para (j)(iia), inserting " and " at the end of para (k)(ii), inserting para (k)(iia) and inserting para (l), applicable to an expense payment benefit that is provided after 7.30pm, by legal time in the Australian Capital Territory, on 13 May 2008 (the commencing time ). However, the amendments do not apply to an expense payment benefit that is provided to an employee after the commencing time and before 1 April 2009 if:

(a) the benefit is provided:

(i) because the employee agreed to receive the benefit in return for a reduction in the employee ' s salary or wages that would not have happened apart from the agreement; or

(ii) as part of the employee ' s remuneration package, in circumstances where it is reasonable to conclude that the employee ' s salary or wages would be greater if the benefit were not made part of that package; and

(b) the agreement was made, or the remuneration package was agreed to, before the commencing time.

S 24(1) amended by No 143 of 2007 , s 3 and Sch 1 items 11 and 12, by omitting " , other than a foreign income deduction, " after " the gross deduction ) " in para (b) and omitting " other than a foreign income deduction " after " once-only deduction " in para (ba)(ii), applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under s 19(1) .

S 24(1) amended by No 101 of 2006 , s 3 and Sch 2 items 83 to 84, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .

S 24(1) amended by No 178 of 1999, No 41 of 1998, No 39 of 1997, No 145 and No 30 of 1995, No 48 of 1991, No 11 of 1989 and No 139 of 1987.

24(2)
For the purposes of the application of this section in relation to a fringe benefit, where the recipient:

(a) while undertaking travel referred to in paragraph (1)(d) , engages in an activity in the course of producing assessable income of the recipient; and

(b) does not make, as mentioned in the definition of travel diary in subsection 136(1) , an entry relating to the activity, being an entry of the kind referred to in that definition;

the activity shall be deemed not to have been engaged in by the recipient in the course of producing assessable income.

24(3)
Where the sum of:

(a) the recipients expenditure in respect of a small expense payment fringe benefit in relation to an employee in relation to an employer in relation to a year of tax; and

(b) the total of the recipients expenditure in respect of all other small expense payment fringe benefits in relation to the employer in relation to the employee in relation to the year of tax, being fringe benefits provided before the fringe benefit referred to in paragraph (a) ;

does not exceed $200, the fringe benefit referred to in paragraph (a) is an eligible small expense payment fringe benefit.

24(3A)

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For the purposes of this section, where the Commissioner is satisfied, having regard to the nature of the recipients expenditure in respect of an expense payment fringe benefit, that it would be unreasonable to expect the recipient to have obtained documentary evidence of the recipients expenditure, the expense payment fringe benefit shall be deemed to be, and always to have been, an undocumentable expense payment fringe benefit.

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24(4)

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For the purposes of paragraph (1)(c) , the part of a petty cash book or similar document that sets out the particulars that would be set out in documentary evidence of the recipients expenditure (other than particulars of the date on which the documentary evidence was made out) is taken to be substitute documentary evidence of the recipients expenditure. The entry must be in English.

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24(5)
Where:

(a) the recipients expenditure in relation to each of 2 or more expense payment fringe benefits (whether or not in relation to the same year of tax) is the same expenditure; and

(b) paragraph (1)(b) applies in relation to the recipients expenditure;

this Act applies, and shall be deemed always to have applied, as if all the payments or reimbursements to which those fringe benefits relate had been made at the time when the first of those payments or reimbursements was made and not otherwise, and nothing in section 74 prevents the amendment of an assessment for the purpose of giving effect to this subsection.

24(6)

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For the purposes of the application of this section to an in-house expense payment fringe benefit, a reference to the recipients contribution in relation to the fringe benefit is a reference to the amount ascertained under whichever of paragraphs 22A(1)(b) or (2)(b) is applicable.

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24(7)
(Repealed by No 162 of 2015)

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History

S 24(7) repealed by No 162 of 2015, s 3 and Sch 1 item 11, applicable in relation to the 2016-17 FBT year and later FBT years. S 24(7) formerly read:

24(7)
Where:

(a) apart from this subsection, paragraph (1)(ea) applies in relation to a fringe benefit in relation to an employer in respect of a car held by the recipient during a period in a year of tax; and

(b) whichever of the following amounts is the greater exceeds the amount that, apart from this subsection, would be ascertained under paragraph (1)(h) as representing the component ND in the formula in subsection (1):

(i) in all cases - the amount that would have been ascertained under paragraph (1)(j) as representing that component if:

(A) paragraph (1)(f) had applied in relation to the fringe benefit; and

(B) a declaration of the kind referred to in subparagraph (1)(f)(i) had been given to the employer;

(ii) in a case where the average number of business kilometres per week travelled by the car during the holding period exceeded 96 - the amount that would have been ascertained under paragraph (1)(k) as representing that component if:

(A) subparagraph (1)(f)(ii) had applied in relation to that fringe benefit; and

(B) a declaration of the kind referred to in subparagraph (1)(f)(i) had not been given to the employer; and

(C) a declaration of the kind referred to in sub-subparagraph (1)(f)(ii)(B) had been given to the employer;

this Act applies, and shall be deemed always to have applied, as if the amount represented by that component had been calculated as mentioned in whichever of subparagraphs (b)(i) or (ii) of this subsection is applicable.

S 24(7) amended by No 145 of 2008, s 3 and Sch 4 item 57, by inserting " and " at the end of para (b)(ii)(A), effective 9 December 2008.

S 24(7) amended by No 145 of 2008, s 3 and Sch 4 items 18 to 21, by substituting " representing the component ND in the formula in " for " the amount (in this subsection called the reducing amount ) by which the taxable value, but for subsection (1) and Division 14, of the fringe benefit is reduced under " in para (b), substituting " representing that component " for " the reducing amount " in paras (b)(i) and (b)(ii) and substituting " the amount represented by that component had " for " the reducing amount had " , applicable to an expense payment benefit that is provided after 7.30pm, by legal time in the Australian Capital Territory, on 13 May 2008 (the commencing time ). However, the amendments do not apply to an expense payment benefit that is provided to an employee after the commencing time and before 1 April 2009 if:

(a) the benefit is provided:

(i) because the employee agreed to receive the benefit in return for a reduction in the employee ' s salary or wages that would not have happened apart from the agreement; or

(b) the agreement was made, or the remuneration package was agreed to, before the commencing time.

S 24(7) inserted by No 139 of 1987.

24(8)
(Repealed by No 162 of 2015)

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24(9)

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For the purposes of paragraph (1)(l) (which applies to an expense payment fringe benefit that, under subsection 138(3) , is deemed to have been provided to an employee only), the amount is calculated in accordance with the formula:

Unadjusted ND × Employee ' s percentage of interest

where:

employee ' s percentage of interest
:

(a) is the percentage of the interest held by the employee, during a period (in this subsection called the holding period ) in the year of tax, in the asset or other thing that:

(i) relates to the matter in respect of which the expense payment fringe benefit is provided; and

(ii) is applied or used for the purpose of producing assessable income of the employee; and

(b) does not include the percentage of the interest held in that asset or other thing by the employee ' s associate or associates during the holding period.

unadjusted ND
is the amount that would be ascertained as representing the component ND in the formula in subsection (1) if paragraph (1)(l) did not apply in relation to the expense payment fringe benefit.

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