Loading
This thread is archived and the information may not be up-to-date. You can't reply to this thread.
TaxPayerAU(Newbie)Newbie
22 Aug 2023

Hello ATO Community,


I have a question regarding the operation of the Fringe Benefits Tax (FBT) exemption and its influence on Higher Education Contribution Scheme (HECS) repayment amounts.


I am considering novating a vehicle that qualifies for the Electric Cars Exemption (FBT exemption).


I have read the information provided on the ATO website about how repayment income is calculated for HECS repayments, it states that the following components are taken into account:

  • Taxable income (excluding assessable First Home Super Saver released amounts)
  • Reportable fringe benefits (irrespective of the employer's exempt status)
  • Total net investment loss, encompassing net rental losses
  • Reportable super contributions
  • Exempt foreign employment income amounts

While I comprehend that HECS repayment obligations (%) are proportional to income brackets, I'm seeking a more detailed understanding of how the exemption status of fringe benefits (FBT) plays into calculating HECS repayment amounts.


Specifically, I'd like to know how the presence of reportable fringe benefits, whether exempt or not, directly influences the final HECS repayment figure.


If anyone could provide an example that illustrates the impact of FBT exemptions on HECS repayments, I would greatly appreciate it. Your insights will greatly assist me in grasping the intricacies of this aspect of taxation.

2,765 views
1 replies
2,765 views
1 replies

Most helpful response

Most helpful reply

AriATO(Community Support)Community Support
28 Aug 2023

Hi @TaxPayerAU


If you receive fringe benefits with a taxable value of more than $2000.00, this is reported to us from your employer as a reportable fringe benefit.


There's a couple of steps your employer needs to do to work out the amount. Your employer works out the taxable value of your car fringe benefit. They then have to "gross this value up". This is the requirement for RFB's. The result represents the pre-tax income at the highest marginal rate, that you would earn to buy the benefits yourself. Essentially, the RFB is an amount that's higher than what you would've got if there were no benefits involved and you received your normal salary.


What this means is -

  1. This higher amount, (the RFB) is considered when working out your repayment income. So this could push you into a higher repayment income bracket when working out your compulsory repayment rate.
  2. When you have amounts deducted from your pre-tax salary during the year, which is typical if you have a novated lease. Your employer withholds tax on this lesser amount. If you haven't accounted for a higher compulsory repayment then you'll likely end up with a debt.

We always recommend getting financial advice before you decide to enter into a novated lease. We have some info on our website about how your employer would calculate FBT.

All replies

Most helpful reply

AriATO(Community Support)Community Support
28 Aug 2023

Hi @TaxPayerAU


If you receive fringe benefits with a taxable value of more than $2000.00, this is reported to us from your employer as a reportable fringe benefit.


There's a couple of steps your employer needs to do to work out the amount. Your employer works out the taxable value of your car fringe benefit. They then have to "gross this value up". This is the requirement for RFB's. The result represents the pre-tax income at the highest marginal rate, that you would earn to buy the benefits yourself. Essentially, the RFB is an amount that's higher than what you would've got if there were no benefits involved and you received your normal salary.


What this means is -

  1. This higher amount, (the RFB) is considered when working out your repayment income. So this could push you into a higher repayment income bracket when working out your compulsory repayment rate.
  2. When you have amounts deducted from your pre-tax salary during the year, which is typical if you have a novated lease. Your employer withholds tax on this lesser amount. If you haven't accounted for a higher compulsory repayment then you'll likely end up with a debt.

We always recommend getting financial advice before you decide to enter into a novated lease. We have some info on our website about how your employer would calculate FBT.

Featured articles

20% reduction of HECS-HELP and other student debts

6 Feb 2026 · 3 min read time

Paying my HECS HELP student loan

13 May 2026 · 4 min read time

Linking your myGov account to the ATO

24 Aug 2025 · 3 min read time

Top liked users

  1. Bruce4Tax

    (Taxicorn)

    3260 likes

  2. Taxduck

    (Taxicorn)

    2069 likes

  3. PayrollDeanne

    (Taxicorn)

    816 likes

  4. YellowPotato

    (Taxicorn)

    529 likes

  5. knaresbro

    (Devotee)

    364 likes

Top contributors

  1. Bruce4Tax

    (Taxicorn)

    10399contributions

  2. Taxduck

    (Taxicorn)

    4762contributions

  3. PayrollDeanne

    (Taxicorn)

    2061contributions

  4. YellowPotato

    (Taxicorn)

    1352contributions

  5. YEP

    (Devotee)

    837contributions

Loading
FBT Exemption, Novated Lease, HECS | ATO Community