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Overseas travel by employees: When does FBT apply?


Payments made by employers to enable their employees to travel overseas and within Australia to conferences and to increase employees’ skills and knowledge may be liable to fringe benefits tax. Where, however, the “otherwise deductible” rule applies, the employer may escape some or all liability for FBT. This rule allows the gross taxable value of certain fringe benefits to be reduced by the amount of the notional “once-only” income tax deduction that the employee would “otherwise” have been entitled to. The effect of the rule is that the FBT is reduced.

This article examines the “otherwise deductible” rule and its application in various practical situations. In particular, the article analyses the application of the rule in circumstances where part of the travel undertaken by an employee is for private purposes.

Author profile

Dr Fiona Martin CTA
Fiona is a solicitor, academic and chartered tax adviser with The Taxation Institute. She commenced working as an academic after several years as a lawyer, both with the government (including the Attorney-General's Department) and in private practice. Her expertise and research are in the taxation law area and in particular how it relates to charities and interacts with issues relating to human rights and traditional land owners. Fiona has published many articles in highly regarded international and Australian law journals, including the Australian Tax Forum and Common Law World Review. She has presented at conferences on issues relating to taxation concessions applying to charities, the application of the GST particularly as it relates to charities and income tax and property development generally. She has also published a number of book chapters and a textbook in the revenue law area. In 2013, she was awarded her doctorate on the application of income tax principles to resource agreements with Indigenous Australians, with particular emphasis on the use of Indigenous charities as a tax-exempt structure. She has also received several research awards. - Current at 01 April 2016
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