Benefits provided to associates of employees are fringe benefits. The definition of an ’associate‘ for FBT is very broad and includes relatives, partners, trustees, beneficiaries, related companies and other people such as a de facto spouse.
The payment of domestic and overseas travel costs for spouses/dependants or nominees (i.e. associates) falls within the definition of an ‘expense payment fringe benefit'. An expense payment fringe benefit is where the employer:
- reimburses the employee for expenses incurred by the employee or an associate of the employee, or
- pays a third party in satisfaction for expenses incurred by an employee or an associate of the employee.
The taxable value of an expense payment fringe benefit is generally the amount of the payment or reimbursement made by the employer. Where the benefit is provided to an associate of an employee, the taxable value of the benefit cannot be reduced by the ‘otherwise deductible' rule. The otherwise deductible rule is only applicable to benefits provided to employees. The travel of an associate is private in nature, and therefore fringe benefits tax is paid on the full cost.