Income tax Dates
From 1 April 2014 if your employer provides vouchers and other short-term charge facilities, the amount may be treated as part of your income for working for Families and student loans.
What a short-term charge facility is
A short-term charge facility allows you to buy, hire or charge goods or services. For example, if:
- your employer provides you with vouchers as a payment for work you've done or as a reward or bonus
- you can use your employer's business charge account with a supplier for your own private purchases
- you're able to use a business credit card for private purchases
and you're not required to pay all the costs associated with the purchase, including any interest and fees.
When you need to tell us about short-term charge facilities
If you've agreed to a lower salary or wages in exchange for vouchers (of the same value as the reduced salary or wage) your employer should be including the value as part of your salary or wages and deducting PAYE.
You do not need to tell us about these vouchers because they will already be included in your taxable income.
You'll generally be considered to have received a benefit if your employer provides you, directly or indirectly, with charge facilities that incur a cost which you do not reimburse. The value of the benefit, less any amounts you pay towards the benefit, is included as income for the purposes of calculating your Working for Families and student loans.
Working out the value of a benefit
This applies to non-cash payments such as vouchers and bartered goods.
If the employee buys goods or services and both of the following apply:
- the employer pays for some or all of the goods or services, or for any of the interest or fees charged
- the goods or services are not connected with the employer or its operations
then the value of what is paid for by the employer is treated as income for Working for Families and student loans.
Threshold for telling us about short-term charge facilities
You'll only need to tell us if the total amount of all short-term charge facilities (including vouchers) for the income year will be or was more than either:
- $1,200 if your salary or wages are more than $24,000
- 5% of your salary or wages
whichever is the smaller amount.
Adding fringe benefit tax
If the amount is more than the threshold then you'll also need to add on the fringe benefit tax (FBT) paid by your employer(s) on this benefit. If you're not sure how much (if any) FBT was paid by your employer, then you need to check with them.
If you're making an estimate of the value for either:
- your weekly or fortnightly payments of Working for Families
- interim instalments for your student loan repayment obligation
and do not know what FBT rate your employer uses, you can simply add 50% of the value of the benefit. For example, if the value of the benefit is $1,400 then add $700 to have an estimated combined value of $2,100.
Example 1 - Grocery vouchers
George is employed by a local clothes shop as a store assistant. The shop often pays their staff with grocery vouchers. In addition to his pay of $200 George is given a $25 grocery voucher each week. This gives George an annual wage of $10,400 and vouchers worth $1,300.
The threshold that applies to George is 5% of his wages, which is $520 ($10,400 x 5%).
As the value of the vouchers is more than $520, George will need to include the value ($1,300) plus any FBT his employer has paid on the vouchers, in his income for Working for Families and student loans.
Example 2 - Petrol vouchers
Florence is employed by her church as a caretaker. Each week the church pays her $100 and gives her a $20 petrol voucher. This gives Florence an annual wage of $5,200 plus $1,040 worth of vouchers.
The threshold that applies to Florence is 5% of her wages which is $260 ($5,200 x 5%).
The vouchers are more than the threshold so she will need to include $1,040 in her income for Working for Families and student loans plus any FBT her employer has paid on the vouchers.
Example 3 - Trade charge account
Chris is employed by a construction company on a salary of $38,000. The company has a trade charge account with the local hardware store. Chris, along with other employees, is allowed to charge her private purchases to the charge account. The hardware store charges interest and account fees for each transaction and a monthly service fee.
Chris is required to pay back to her employer 90% of her private purchase on the trade charge account. Her employer covers the remaining 10%, plus any fees and interest.
Chris and her spouse are building their own home so she makes extensive use of the charge account. Chris's charges through the hardware company plus other fees were:
- goods purchased $50,000
- interest $1,000
- account fee for the transactions $20
- monthly service fee $30
Chris pays her employer $45,000 (90% of $50,000).
The amount Chris needs to include as income for Working for Families and student loans is calculated as follows:
- total charges $51,050
- less monthly service fee (monthly service fee not included as employer uses hardware store for its business operations)
- less amount Chris paid ($50,000 charged less 10% discount) $45,000
Total benefit $6,020
The threshold used in this case is $1,200. When working out what's included as income Chris will need to add any FBT her employer has paid on the benefit.
Chris approaches her employer for the information she needs to use and is advised the benefit is $6,020 and the FBT they paid is $2,965.
Chris needs to include $8,985 ($6,020 plus $2,965 FBT) as part of her income for Working for Families and student loans.