Fringe benefit tax on specific categories of benefits: Employer contributions to funds, insurance and superannuation schemes
Life insurance contributions
Only some employer contributions to life insurance are subject to fringe benefit tax.
Which life insurance contributions are liable for fringe benefit tax?
Fringe benefit tax is charged for:
- an insurance policy where an employer takes it out for an employee and pays the premiums
- an insurance policy of a life insurance agent or their family, where there is a discounted premium. For FBT purposes, the life insurer is liable for fringe benefit tax and self-employed commission agents are employees (as their commissions are schedular payments, formerly withholding payments).
Which life insurance contributions are not liable for fringe benefit tax?
Fringe benefit tax is not charged for:
- An insurance policy where an employee or family member takes it out and the employer pays the premiums - in this case, the payments are taxable income in the hands of the employee.
- An insurance policy where an employer takes it out for an employee, pays the premiums and gains the benefit from the policy (while the employee does not benefit). In this case, the payments are not subject to fringe benefit tax, and are not taxable in the hands of the employee.
Date published: 27 Jun 2008
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