Fringe Benefits Tax
Fringe Benefits Tax (FBT) is an employer tax that is paid by the employer when certain benefits are received by an employee as a result of their employment.
FBT can affect your personal taxation obligations in respect to child support payments and eligibility for other Government means tested benefits such as Family Tax Benefit A or B, Medicare Levy and HECS-HELP.
DHOAS is classed as a reportable expense payment fringe benefit under section 20 (a) of the Fringe Benefits Tax Assessment Act 1986. This means that Defence will pay a portion of the grossed up value of the benefit.
The amount that will appear on your payment summary will be the 'grossed up' amount, as Defence is obliged to report it in this way. The grossed up amount reflects the amount you would have needed to have earned to receive the net amount of the benefit. This is similar to how salary and wages are reflected on payment slips and payment summaries.
In addition, the grossed up value of the fringe benefit may be used to determine certain income tested government benefits such as the family tax benefit and the parental income test for the youth allowance. It may also have an effect on childcare payment arrangements. For further information, see the Department of Human Services website link (https://www.humanservices.gov.au/customer/news/do-you-get-reportable-fringe-benefits). The change in the way reportable fringe benefits are assessed was enacted 1 January 2017.
Whilst DHOAS is classified as a reportable fringe benefit there are occasions whereby the benefit may be considered non-reportable. DHOAS will not appear on payment summaries if you are an active reservist, have been afforded war-like credits (maximum of 60 months) and been deployed on 23AG and or 23AD. However, if 23AG or 23AD is applicable it, will only cover the period that you were afforded these income tax exemptions.
If the property that your DHOAS loan relates to is rented out, you should contact Defence on 1800 333 362 and gain access to a “Loan declaration” form (AE394) so that Defence can apply the “Otherwise deductible” rule.
When Defence applies the “Otherwise Deductible” rule the DHOAS loan will not appear on your payment summary. It is advisable that you read the AE 394 instructions.
However, you will only have a Reportable Fringe Benefit Amount (RFBA) reported on your payment summary if the total of all the reportable fringe benefit exceed the current threshold of $2000.00. Therefore, if you are in receipt of DHOAS that exceeds the $2000 threshold you will more than likely have a RFBA.
Payment summaries for DHOAS reportable fringe benefits are issued by Defence. However Defence will not know an RFBA amount until the end of the FBT year. Therefore, if you are asked for an estimate to provide to Centrelink it is suggested that you use the year’s prior RFBA figures as a guide.
As tax matters are complicated, we urge members to seek independent financial advice on their individual circumstances before accessing DHOAS.