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How can I as an employee be reimbured for expenses incurred in relation to a car fringe benefit?

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My employer provides me with a car fringe benefit for a car that they own. They use the Statutory formula method for calculating FBT if that's relevant.

 

The car meets the definition of a car per https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-benefits/Car-fringe-benefit... .

 

My employer only wants to reimburse running costs such as fuel and car repairs that I incurred and paid for from after tax income, to my private credit card. I would like them to reimburse it to my Australian bank account instead.

 

My employer says they can't reimburse it to my bank account because they can only reimburse car expenses incurred on the car to a third party. This comes from their interpretation of the following paragraph

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Employees/Salary-sacrifice-arrang...

 

Per Section 7.8 of this page https://www.ato.gov.au/law/view/document?DocID=SAV%2FFBTGEMP%2F00008

 

"You can apply car expenses paid for by an employee as an employee contribution under both the statutory formula and operating cost methods. However, the employee must provide you with documentary evidence of the expenditure (for example, receipts or invoices). "

 

Meaning if car expenses paid for buy an employee can be applied as an employee contribution, then surely they can be reimbursed to the employees bank account if the employee provides the required documentary evidence that they have paid a third party for the fuel, repairs, etc as well?

 

I know this might not appear to be a major issue, but it does cause other issues in our organisation with regard to how credit card details are stored and handled (PCI DSS) so getting an answer to this will be greatly appreciated.  

 

 

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ATO Certified Response

Former Community Support

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Hi @G_22,

 

Thanks for getting in touch!

 

A reimbursement by an employer of amounts paid by an employee for the running costs of a car from income received after tax is generally considered to be an expense payment and not a salary sacrifice nor an employee contribution.

 

Generally, where expenditure has been incurred by an employee as an agent for the employer, and the employer subsequently reimburses the employee or pays a third party directly, an expense payment benefit arises, not a property or residual benefit.


Therefore, the reimbursement by the employer can be made directly to an Australian bank account instead of a private credit card, however, this is a matter between you and your employer. 

 

You can find more information about fringe benefits tax which explains what each benefit type is, in our Fringe benefits tax - a guide for employers.

 

Thanks.
 

 

1 REPLY 1

Most helpful response

ATO Certified Response

Former Community Support

Replies 0

Hi @G_22,

 

Thanks for getting in touch!

 

A reimbursement by an employer of amounts paid by an employee for the running costs of a car from income received after tax is generally considered to be an expense payment and not a salary sacrifice nor an employee contribution.

 

Generally, where expenditure has been incurred by an employee as an agent for the employer, and the employer subsequently reimburses the employee or pays a third party directly, an expense payment benefit arises, not a property or residual benefit.


Therefore, the reimbursement by the employer can be made directly to an Australian bank account instead of a private credit card, however, this is a matter between you and your employer. 

 

You can find more information about fringe benefits tax which explains what each benefit type is, in our Fringe benefits tax - a guide for employers.

 

Thanks.