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Re: Categorisation of repayment of education expenses as reimbursement or income?

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Newbie

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Hi,

 

Under my contract of employment, I am given a cash benefit equal to the cost of attending College of Law (i.e. post graduate studies which must be undertaken before being admitted as a lawyer). Throughout the course I will be deferring my payment through FEE-HELP. I will receive the cash payment after completing the course.

 

Is this cash payment a reimbursement and therefore not subject to taxation as ordinary income?

 

Please note I am working in the legal industry and there is a connection between this expense and my ability to generate income - if that is relevant to the reimbursement test.

 

Thank you in advance.

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ATO Certified Response

Community Moderator

Replies 0

Hi  @JY2397,

 

If a reimbursement (such as for course fees) that an employer provides to an employee is covered by Fringe Benefits Tax (FBT), the amount of the reimbursement would not be assessable income to the employee. Also the employee cannot claim a deduction for the expense.

 

This situation would be covered by FBT. This is because you incurred expenses for the course fees, which were initially funded with a FEE-HELP loan, and your employer reimbursed you for the expenses incurred. This provided you with an ‘expense payment benefit’.

 

Information about ‘expense payment fringe benefits’ is provided in Chapter 9 of the ATO’s Fringe Benefits Tax – A Guide for Employers publication on our website.

 

 Please note that any FBT that is applicable to this expense payment fringe benefit would be payable by your employer. Although the taxable value may be reduced under the ‘otherwise deductible rule’.

 

Therefore you would not include the reimbursement of course fees in their assessable income.

 

KylieS

3 REPLIES 3

Community Moderator

Replies 1

HI @JY2397 ,

 

Interesting question, will find some information out for you.

 

KylieS

Newbie

Replies 0

Hi @KylieATO

Thank you for your response.

I would appreciate any information you can provide!

Most helpful response

ATO Certified Response

Community Moderator

Replies 0

Hi  @JY2397,

 

If a reimbursement (such as for course fees) that an employer provides to an employee is covered by Fringe Benefits Tax (FBT), the amount of the reimbursement would not be assessable income to the employee. Also the employee cannot claim a deduction for the expense.

 

This situation would be covered by FBT. This is because you incurred expenses for the course fees, which were initially funded with a FEE-HELP loan, and your employer reimbursed you for the expenses incurred. This provided you with an ‘expense payment benefit’.

 

Information about ‘expense payment fringe benefits’ is provided in Chapter 9 of the ATO’s Fringe Benefits Tax – A Guide for Employers publication on our website.

 

 Please note that any FBT that is applicable to this expense payment fringe benefit would be payable by your employer. Although the taxable value may be reduced under the ‘otherwise deductible rule’.

 

Therefore you would not include the reimbursement of course fees in their assessable income.

 

KylieS