ATO ID 2005/366: Exempt Benefits: minor benefits - gift jointly purchased by employer and employees - calculation of notional taxable value
Date of decision: 25 May 2005
Year of income: Year ended 31 March 2006
Business line: Private Groups and High Wealth Individuals

Issue
Where a gift is presented to an employee, which has been purchased using funds contributed by both the employer and work colleagues, will those contributions made by the work colleagues be included in determining whether the notional taxable value of the minor benefit is less than $300, as specified in paragraph 58P(1)(e) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
No. Only the amount contributed by the employer would be relevant in determining whether or not the requirements of paragraph 58P(1)(e) of the FBTAA have been satisfied.

Facts
An employee and their partner have a new baby. To recognise this event, a work colleague of the employee collects voluntary contributions from other work colleagues, for the purpose of presenting a gift to the employee. As a matter of company policy the employer considers that a gift to the employee is appropriate, and therefore contributes an amount towards the purchase of a suitable gift. Whilst the total amount collected is in excess of $300, the amount contributed by the employer is less than $300. The combined funds are used to purchase a gift which is presented to the employee at a staff presentation. The gift is a property benefit as defined in subsection 136(1) of the FBTAA. The other requirements of section 58P of the FBTAA have been met.

Reasons for decision
Summary: Section 58P of the FBTAA exempts benefits provided to employees which are considered minor in nature. To satisfy paragraph 58P(1)(e) of the FBTAA, it is necessary that the notional taxable value of the minor benefit in relation to a current year of tax be less than $300. 'Notional taxable value' is defined in subsection 136(1) of the FBTAA as being: in relation to a benefit provided ....., in respect of the employment of an employee, means the amount that, if it were assumed that.... the benefit was a fringe benefit in relation to the employer in relation to the year of tax, would be the taxable value in relation to the year of tax. As the property to be gifted has been purchased, the benefit provided by the employer would be an external property fringe benefit. Under these circumstances, the taxable value of the benefit would then be calculated in accordance with paragraph 43(a) of the FBTAA, meaning that its value would be based on the 'cost price of the recipients property to the provider'. Under paragraph (c) of the definition of 'cost price' in subsection 136(1) of the FBTAA, the cost price of a property fringe benefit means the expenditure incurred by the provider that is directly attributable to purchasing or obtaining delivery of the property. Under these circumstances it is accepted that the employer is the provider and the expenditure that is 'incurred by the provider' is the amount that has been contributed by the employer towards the purchase of the gift. Therefore, as the notional taxable value of the benefit is less than $300, the requirements of paragraph 58P(1)(e) of the FBTAA would be satisfied.

Legislative references: Fringe Benefits Tax Assessment Act 1986 paragraph 43(a) paragraph 58P(1)(e) subsection 136(1)
Subject references: Fringe benefits tax Fringe benefits Minor benefits