FBT
Reportable fringe benefits amount
The reportable fringe benefits amount is the grossed-up value of certain fringe benefits shown on an employee's income statement, which is not taxed but counts towards some income tests.
The reportable fringe benefits amount, often shortened to RFBA, is an amount shown on an employee's income statement when the total taxable value of certain fringe benefits provided to them in an FBT year exceeds a threshold set by the ATO. It is the grossed-up taxable value of those benefits, worked out using the lower of the two gross-up rates. It is not included in the employee's assessable income and does not mean the employee pays more income tax directly, but it matters for several other purposes.
The amount is used when working out various income tests and thresholds. These include the Medicare levy surcharge, certain government benefits and family payments, and study loan repayments. For instance, someone with a high reportable fringe benefits amount may find their income for these tests is higher than their taxable income, which could affect eligibility or repayment amounts. It is therefore important for employees to know about it.
Employers are responsible for working out and reporting the amount. Where the threshold for reporting is reached, the employer includes the figure in their end-of-year reporting through Single Touch Payroll. The employee sees it on their income statement through myGov, and the ATO uses it in the assessment. Employers should make sure their records are correct, because errors will affect the employee's tax position and may require correction.
Not all benefits are reportable. Some exempt benefits and certain employers' benefits are excluded, and the rules for particular benefits, such as those to employees of some public benevolent institutions, are different. Employers who offer salary packaging arrangements often tell employees about the reportable amount because it can reduce the net benefit of packaging for those affected by the tests. Employers should check ato.gov.au for the current reporting threshold.
GST does not appear in the reportable amount directly. The amount is based on the taxable value of the benefits after taking into account whether GST credits were claimed, because that affects the gross-up rate used. For employees, the key point is that the figure is not GST or income tax but a reporting measure. Employers should explain the difference to avoid confusion.
A common misunderstanding is that the reportable fringe benefits amount is additional taxable income. It is not. The employer pays FBT on the benefit, and the employee is not taxed on it, but the amount is added to income for particular tests. Another is to forget it when assessing eligibility for government payments or when planning for the Medicare levy surcharge.
This is general information only, so confirm your position with the ATO or a registered tax professional.
Worked example
An employee receives a taxable value of $8,000 in fringe benefits in an FBT year, which exceeds the reporting threshold. The employer grosses it up using the lower gross-up rate, using a hypothetical gross-up factor of 1.9 for illustration, giving $15,200, which appears as the reportable fringe benefits amount. It does not increase the employee's taxable income, but it counts in income tests such as the Medicare levy surcharge.
Practical tips
- Tell employees about the reportable amount before they agree to a packaged arrangement, since it can affect their other income tests.
- Check the current reporting threshold with the ATO, as the figure is set by legislation.
- Make sure end-of-year STP reporting includes the correct amount for each employee.