The ATO has confirmed major FBT changes that will affect any employer offering salary sacrificed work-related benefits.
What’s changing?
1. The ‘otherwise deductible rule’ is closing for salary sacrifice
Employers will no longer be able to use the otherwise deductible rule to reduce FBT on expense payment benefits that are:
work-related
- covered by the new standard deduction, AND
- provided through a salary sacrifice arrangement
This includes reimbursement of:
- home office expenses
- home phone / internet
- self-education expenses
2. No more FBT exemption for salary sacrificed tools
The following items will NO LONGER be FBT-exempt when provided via salary sacrifice:
Portable electronic devices, computer software, protective clothing, briefcases, tools of trade
3. Good news – One-item limit removed (non-salary sacrifice)
Employers can now provide MORE than one work-related item with the same function in an FBT year and keep the exemption, as long as it’s mainly for work and NOT salary sacrificed. This now applies to ALL employers, not just small business.
Action for 2027-28 FBT Year: Review your salary sacrifice agreements, FBT calculations and record-keeping now.
If you offer laptops, phones, tools or expense reimbursements via salary sacrifice, let’s review your FBT position before 1 April 2027.
General info only. This is not personal tax advice. Tax laws change. You should seek advice specific to your circumstances from a registered tax agent before acting.
