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24 Oct 12 MYEFO: Removal of concessional treatment for salary sacrificed 'in-house' fringe benefits

In media release No 2012/099, issued 22 October 2012, the Treasurer, Wayne Swan, announced, as part of the Mid-Year Economic and Fiscal Outlook 2012-13 (MYEFO), the removal of concessional treatment for 'in-house' fringe benefits if they are accessed through a salary sacrifice arrangement.

This measure will apply from 22 October 2012 for salary sacrifice arrangements entered into from its announcement on 22 October 2012, and from 1 April 2014 for salary sacrifice arrangements entered into prior to its announcement on 22 October 2012.

In-house fringe benefits arise when employees receive goods or services from their employer or an associate of their employer that are identical or similar to those provided to customers by the employer or an associate of the employer in the ordinary course of business. Under the existing FBT concession, the taxable value of in-house fringe benefits is 75 per cent of either the lowest price at which an identical benefit is sold to the public or under an arm’s length transaction, depending on the nature of the benefit, reduced by a further $1,000.

The existing FBT concession was introduced before the widespread use of salary sacrifice arrangements. This measure will return the use of this FBT concession to its original intent. Under this measure, the taxable value of in-house fringe benefits provided through a salary sacrifice arrangement will be either the lowest price at which an identical benefit is sold to the public or under an arm’s length transaction, depending on the nature of the benefit.

 


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