Fringe benefits are benefits received from your employer besides your salary and wages. These need to be reported to the ATO based on certain values of benefits provided. For example - if your benefits exceed $2,000 in value in a fringe benefits tax (FBT) year (from 1 April to 31 March).
Reportable Fringe Benefit Amounts do not affect your income tax liability but the ATO will take them into account when determining certain other obligations and entitlements. More information can be found on the ATO Website.
It is important that you report the reportable fringe benefits to the ATO as well as the relevant Government agencies (Centrelink, Child Support, HECS/HELP, etc.).
The reportable fringe benefits differ from your regular salary in that they are the “grossed up” amount of what you have salary packaged. The “grossed up” amount is the amount salary packaged, multiplied by a gross-up factor set by the ATO. For example, the gross up factor is you salary package living expenses is 1.8868. What this means is that if you salary package $9,010 for the year, your grossed up amount will be $17,000 ($9,010 x 1.8868).
Here's an example -
David’s gross salary is $50,000 per year and he salary packages $9,010 towards his mortgage and $2,650 onto his entertainment benefit card.
He is only taxed on his remaining salary which is $38,340, meaning he saves around $3,700 per year in tax.
The reportable salary (the amount reported to relevant Government agencies) becomes $60,340 ($38,340 taxable income + $22,000 reportable fringe benefits).
Your HECS/HELP repayments are based upon your ‘HELP Repayment Income’, which includes any Reportable Fringe Benefit Amount.
Eastern Health Payroll department does not take RFBAs into account when calculating your periodic HECS/HELP deductions throughout the income tax year. To avoid this, you can ask Eastern Health Payroll department to withhold additional HELP contributions.
A guide for employees to help understand more about your HECS/HELP repayments.