Some benefits provided to employees for health and safety reasons can be exempt from Fringe Benefit Tax (FBT). However, not every health or wellbeing expense will qualify.
For the exemption to apply, the benefit generally needs to meet all of the following requirements:
It must be provided to an employee
If you operate through an ordinary limited liability company and work in the business, you are generally considered an employee for FBT purposes. This includes shareholder-employees.
Special rules apply to Look-Through Companies (LTCs).
If you personally own shares in an LTC and work in the business, you are generally treated as a “working owner” and fall outside the FBT regime. If you work in the LTC but do not personally own shares—for example, the shares are held by a family trust—you may instead be treated as an employee for FBT purposes.
It must relate directly to health and safety
The benefit needs to address health and safety in the workplace rather than simply being an employee perk or general wellbeing benefit.
It must manage a specific workplace risk
The benefit should help the employer manage an identified workplace risk and meet their obligations under the Health and Safety at Work Act 2015.
For example, providing flu vaccinations to reduce the risk of a workplace outbreak may qualify. A gym membership provided simply to encourage general fitness would not.
It must not be an excluded type of benefit
Certain benefits, such as subsidised travel, accommodation and ordinary clothing, generally do not qualify unless they are specifically required to manage a particular workplace health and safety risk.
Examples that may qualify:
- An ergonomic desk and chair for an employee working from home where required to manage the risk of injury.
- Counselling services where a high-stress workplace creates an identified mental health risk.
- COVID-19 vaccinations.
- Eye or hearing tests where there is a workplace-related risk.
- First aid training to manage workplace injury risks.
- Sunscreen for employees who regularly work outdoors.
Examples that generally do not qualify:
- Entry or sponsorship for a corporate running or cycling event aimed at promoting general health and wellbeing.
- Prescription glasses or hearing aids where these are primarily for the employee’s personal use.
- Health insurance premiums covering general health risks.
The key question
The important distinction is whether the benefit is being provided to manage a genuine workplace health and safety risk, rather than simply to improve an employee’s general health or wellbeing.
If you are providing health or wellbeing benefits to your employees and are unsure whether FBT applies, talk to us before treating the benefit as exempt. We can help you determine the correct tax treatment.
