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Early Monday Ramblings – A New FBT Exemption

In Division 13 of Part III of the Fringe Benefits Tax Assessment Act 1986 are a series of FBT exemptions. From section 53 to section 58ZD are a very long list, 41 to be exact, of exemptions… but now there could be 42 exemptions as the Treasury has released draft legislation adding a new exemption.

Under the proposed 58ZD, employers will be exempt from FBT if they provide training or education to a redundant, or soon to be redundant, employee for the purpose of assisting that employee to gain new employment.

Under the new law, a benefit is exempt from FBT only if:

  1. The employer has complied with any obligations under the Fair Work Act 2009 that applies in relation to the redundancy;
  2. The education or training is for the primary purpose of enabling the employee to gain or produce salary or wages in respect of any employment to which the education or training relates;
  3. The benefits are not provided under a salary packaging arrangement;
  4. The benefits that involve a primary course or secondary course (as defined under the A New Tax System (Goods and Services Tax) Act 1999); and
  5. The benefit is not provided to relatives of certain employers .

Interestingly, section 58ZD has a definition of what is redundant. It says:

For the purposes of paragraph (1)(b), an employee is redundant if the employee’s employer no longer requires, or reasonably expects to no longer require, the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s business or undertaking.

Notice this applies to the situation where the employer reasonably expects to no longer require the job. So you could pay for the training before they are made redundant if you reasonably expect the role will be gone.

If this becomes law it will apply from the first 1 January, 1 April, 1 July or 1 October to occur after the day the Act receives Royal Assent.

By Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.

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