Published on 01 Feb 15
by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
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.