Changes to the value of fringe benefits used for means testing

By Ali Suleyman - November 11, 2016

Employers may find that more and more of their employees will question their reportable fringe benefits amounts (RFBA) in the coming years due to changes in the way that the RFBA is used in certain income tests.

Whilst nothing changes in terms of what is reported on the RFBA, it is how this number is used to means test that is changing.

Employees who receive certain benefits or concessions may find their entitlements reduced under the new methodology introduced from 1 January 2017. Under the current legislation, a benefit provided to an employee with a value of $3,000 would have been attributed a value of $3,000 for means testing purposes. Under the new legislation, the value used for means testing increases to $5,882 (i.e. the value reported on the payment summary).

A list of the more common government benefits and concessions that will be affected by the change include the:

  • Family Tax Benefit (Part A and B)
  • Child Care Benefit and Rebate
  • Parental Leave Pay, and Dad and Partner Pay
  • Low income aged persons and pensioners rebate
  • Net Medical Expenses Offsets
  • Dependent (invalid and carer) tax offset
  • Low income aged persons and pensioners
  • Parental income test for the Youth Allowance/ABSTUDY

It is important to note that the changes should not affect the value of reportable exempt benefits provided by FBT exempt organisations (e.g. public hospitals or Public Benevolent Institutions) that is used for means testing purposes.

Employers should review their reporting processes to ensure that they are robust and may also consider increase the quality of employee communication in respect of reportable fringe benefit amounts. For example, employers may consider communicating detailed RFBA information to employees (or certain employees) prior to the issue of PAYG payment summaries to manage employee expectations and allow for any changes that may need to be made.

We would be pleased to assist employers in any communications they may wish to make to employees, or to explain the changes further.

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