You may provide your employees with benefits you do not usually provide because of COVID-19. This includes paying for items that allow your employees to work from home.
Fringe benefits tax (FBT) may apply if you provide benefits in addition to salary and wages. However, exemptions and concessions are available, that can reduce (or eliminate) the amount of FBT you pay.
For information on the tax deductibility of COVID-19 tests for employees attending the workplace, and how it affects FBT, see FBT, COVID-19 tests and the otherwise deductible rule.
COVID-19 vaccination incentives and rewards
If you provide your employees with incentives or rewards for getting their COVID-19 vaccination or booster dose, there may be tax and super consequences in doing so. The consequences differ depending on whether a cash payment, paid leave or non-cash benefit is provided.
If you provide non-cash benefits, you may have to pay FBT on these benefits unless an exemption – such as the minor benefits, work-related preventative health care or in-house benefits exemption – applies.
We have published a fact sheet with more detailed information on COVID-19 vaccination incentives and rewards.
Not-for-profit salary packaging
If you are a not-for-profit employer, you may provide salary-packaged meal entertainment to your employees to take advantage of an exempt or rebatable cap.
Arrangements to provide meals may qualify as salary-packaged meal entertainment depending on:
- the facts and circumstances of the meal
- how the meal is provided.
Given the unprecedented circumstances brought about by COVID-19, we will not apply compliance resources to scrutinise expenditure under these arrangements for the FBT year ending 31 March 2022 for meals provided:
- by a supplier that was authorised as a meal entertainment provider from 1 April 2021, and
- while restaurants and public venues were required to be closed to dine-in service due to a COVID-19 state public health order.
We have also confirmed that we will not apply compliance resources to scrutinise expenditure for the:
- FBT year ending 31 March 2021 – where meals are provided by a supplier that was authorised as a meal entertainment provider from 1 March 2020
- FBT year ended 31 March 2020 – when restaurants and public venues were closed.
Find out about
- TR 97/17 Income tax and fringe benefits tax – entertainment by way of food or drink
Working from home
You may have provided employees with items to allow them to work from home (or from another location) due to COVID-19.
Some items will usually be exempt from FBT if they are primarily used by your employees for work. The items include:
- portable printers
- other electronic devices.
Also, the minor benefits exemption or the otherwise deductible rule may apply if you:
- allow your employee to use a monitor, mouse or keyboard they otherwise use in the workplace, or
- provide them with stationery or computer consumables or pay for their phone and internet access.
The minor benefits exemption may apply for minor, infrequent and irregular benefits under $300.
The otherwise deductible rule allows you to reduce the taxable value of benefits by the amount that your employee can claim a once-only deduction.
Closure of work car park
If, on a particular day, your office is closed due to COVID-19 and therefore the work car park is also closed, you will not have provided a car parking benefit as there will be no car space available for use by your employee for more than four hours between 7.00am and 7.00pm on that day.
The time during which the work car park is closed will not form part of the availability periods used to calculate the taxable value of a car space under the statutory method.
Closure of nearby commercial parking stations
If all of the commercial parking stations within a 1km radius of your business premises are closed on a particular day due to COVID-19, there will be no car parking benefits provided.
Reduced rates at commercial parking stations
If, on 1 April 2020, the lowest fee charged by all of the commercial parking stations within a one kilometre radius of your business premises for all-day parking was less than $9.15, you will not have provided a car parking benefit. For example, this may occur where all of the commercial parking stations have discounted their all-day parking rate due to COVID-19.
However, the reduced fee must not be substantially greater or less than the average of the lowest fee charged by a commercial parking station operator in the four weeks prior to 1 April 2020 or the four weeks after 1 April 2020. The reduced fee is disregarded for the purpose of determining the lowest fee charged by a nearby commercial parking station if it does not meet this requirement.
Find out about
- Car parking fringe benefits
- FBT – A guide for employers: Chapter 16 – Car parking fringe benefits
- Draft Taxation Ruling TR 2019/D5 – Fringe benefits tax: car parking fringe benefits
- Draft update to Chapter 16 of Fringe benefits tax: a guide for employers
Car returned to employer’s business premises
You won’t provide a car fringe benefit where a car is not applied for your employee’s private use or taken to be available for your employee’s private use.
During a period of COVID-19 restrictions, a car that you have provided to your employee is not taken to be available for your employee’s private use if all the following apply:
- the car is returned to your business premises
- your employee cannot gain access to the car
- your employee has relinquished an entitlement to use your car for private purposes.
Some factors that indicate a car is not taken to be available for your employee’s private use during these restrictions include where:
- you request that the car be returned to your business premises
- your employee does not have physical access to the car
- you consistently enforce a policy that your employee cannot gain access to the car
- if your employee has made a choice to surrender the car, they cannot change that choice and obtain the ability to access the car
- the car is returned to your business premises and you apply the car to a different purpose (although a separate car benefit may arise if you give the car to another employee who applies it for private use).
For more information see FBT – A guide for employers: Chapter 7 – Car fringe benefits.
Garaging work cars at your employees’ homes
You may have been garaging work cars at your employees’ homes due to COVID-19.
You may not have an FBT liability depending on:
- the type of vehicle
- how often the car is driven, and
- the calculation method you choose for car benefits.
We have published the COVID-19 and car fringe benefits fact sheet with more detailed information.
Your employees’ driving patterns may have changed due to the effects of COVID-19.
If you use the operating cost method, you may have an existing log book. You can still rely on this log book to make a reasonable estimate of the business kilometres travelled.
You can also choose to keep a new logbook that’s representative of your business use throughout the year.
We have published a fact sheet with more detailed information.
Accommodation, food and transport
You will not have to pay FBT if you provide emergency accommodation, food, transport or other assistance to an employee if:
- the benefit is emergency assistance to provide immediate relief, and
- the employee is, or is at risk of being, adversely affected by COVID-19.
In the context of COVID-19, the FBT emergency assistance exemption applies if you provide emergency accommodation, food, transport or other assistance to an affected employee. For example:
- expenses incurred relocating an employee, including paying for flights home to Australia
- expenses incurred for food and temporary accommodation if an employee cannot travel due to restrictions (domestic, interstate or intrastate)
- benefits provided that allow an employee to self-isolate or quarantine
- transporting or paying for an employee’s transport expenses including car hire and transport to temporary accommodation.
For more information visit Coronavirus (COVID-19)External Link.
Temporary accommodation and meals for fly-in fly-out and drive-in drive-out employees
You will not have to pay FBT for benefits considered emergency assistance. This includes providing temporary accommodation and meals to fly-in fly-out or drive-in drive-out employees who are unable to return to their normal residence due to COVID-19 domestic and international travel restrictions.
Items that help protect employees from COVID-19
You may need to pay FBT on items you give your employees to help protect them from contracting COVID-19 while at work. These include:
- anti-bacterial spray.
However, these benefits are exempt from FBT under the emergency assistance exemption if you provide them to employees:
- who have physical contact with – or are in close proximity to – customers or clients while carrying out their duties, or
- are involved in cleaning premises.
Examples of this type of work include:
- medical (such as doctors, nurses, dentists and allied health workers)
- hairdressing and beautician
- retail, café and restaurant.
If your employees’ specific employment duties are not of the kind described above, the minor benefits exemption may apply if you provide an employee with minor, infrequent and irregular benefits under $300.
Emergency health care
There is a limited exemption from FBT if you provide emergency health care to an employee affected by COVID-19. It only applies to health care treatment provided:
- by an employee of yours (or an employee of a related company)
- on your premises (or premises of the related company)
- at or adjacent to an employee’s worksite.
If you pay for your employee’s ongoing medical or hospital expenses, FBT applies.
However, if you pay to transport your employee from the workplace to seek medical help, the cost is exempt from FBT.
Flu vaccinations for employees working from home
Providing flu vaccinations to employees is generally exempt from FBT because it is work-related preventative health care.
You will not have to pay FBT for providing your employees with a voucher or reimbursement for getting the flu vaccine from a GP or chemist as long as it is available to all employees.
If only some of your employees choose to receive the flu vaccine, the voucher or reimbursement is still exempt from FBT as long as it is offered to all employees.
You may require your employees to undertake COVID-19 testing before attending the workplace. Your employees may also be required to have COVID-19 tests if they are travelling for work. This may include polymerase chain reaction (PCR) tests, and/or rapid antigen tests.
Where you provide a test to your employee, or reimburse the cost of a test, you may be providing a fringe benefit to your employee.
However, the tests are exempt from FBT as work-related medical screening – and no FBT is payable – where both of the following apply:
- testing is carried out by, or on behalf of, a legally qualified medical practitioner or nurse, and
- testing is available to all employees.
If only some of your employees get COVID-19 tests, the tests are still exempt as long as they are offered to all employees.
If the tests you provide or reimburse do not meet these requirements, you may need to pay FBT unless the minor benefits exemption or ‘otherwise deductible rule’ apply.
Minor benefits exemption
This exemption will only apply where the tests are provided infrequently and irregularly, and the cumulative value of the tests provided to an employee during the FBT year is less than $300.
Testing for work-related purposes and the otherwise deductible rule
From 1 July 2021, individuals who buy or pay for a COVID-19 test for work-related purposes – such as to work out if they should attend or remain at work – can claim an income tax deduction for this expense.
If an employer buys, pays for or reimburses these expenses instead of the employee incurring the expense, the otherwise deductible rule may apply.
For information about testing to attend for work-related purposes and the otherwise deductible rule, see FBT, COVID-19 tests and the otherwise deductible rule.
You will not have to pay FBT if you are required to pay non-refundable costs for cancelled events your employees were due to attend. This is because:
- the arrangement was between you and the event organisers, not your employees, and
- you have not provided any fringe benefits to your employees as they did not get to attend the event.
However, you may have to pay FBT if your employees were required to pay for their attendance at the cancelled event and you reimbursed them. This would be an expense payment fringe benefit – unless the otherwise deductible rule applies.
Australian Taxation Office
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.