Private ruling: Fringe benefits tax - capping threshold
Date of advice: 5 February 2026
Published: 23 March 2026
Ruling period: Fringe Benefits Tax (FBT) Year Ending 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: For the purposes of the exemption under s 57A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA),will Entity B (formerly Entity A) be able to apply the full $17,000 capping threshold under subsection 5B(1E) of the FBTAA in respect of its existing employees for the period DDMMYY to DDMMYY (under its former name) and again from DDMMYY to DDMMYY (under its current name)? | A1: No.


Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986, section 57A | Fringe Benefits Tax Assessment Act 1986, subsection 5B(1D) | Fringe Benefits Tax Assessment Act 1986, subsection 5B(1E) | Fringe Benefits Tax Assessment Act 1986, subsection 5B(1M)

Reasons for decision: Summary: Entity B will not be able to apply the full $17,000 capping threshold under subsection 5B(1E) of the FBTAA in respect of its existing employees for the period DDMMYY to DDMMYY (under its former name of 'Entity A') and again from DDMMYY to DDMMYY (under its current name of 'Entity B')? | Detailed Reasoning - Detailed reasoning: Under section 57A of the FBTAA, benefits provided by the following employers in respect of the employment of an employee are exempt from Fringe Benefits Tax (FBT) up to a specified cap: • registered Public Benevolent Institutions (PBI) endorsed under section 123C of the FBTAA • registered health promotion charities (HPC) endorsed under subsection 123D(1) • public hospitals • hospitals run by a rebatable employer (relevantly, charities that are not PBIs) • government employers whose employees work in public and not-for-profit hospitals, and • public ambulance services. Benefits provided by the employers listed above will be exempt where the total grossed-up value of certain benefits (which are benefits not otherwise exempt) provided to each employee during the FBT year is equal to, or less than, the relevant capping threshold. If the total grossed-up value of certain benefits provided to an employee is more than that capping threshold, the employer will need to pay FBT on the excess. This amount is determined by reference to the employer's 'aggregate non-exempt amount' in accordance with the Method Statement in subsection 5B(1E) of the FBTAA, which states: Step 2. If: (a) (Repealed by No. 142 of 2003) (b) the employer is a government body and the duties of the employment of one or more employees are as described in paragraph 57A(2)(b) (which is about duties of employment being exclusively performed in or in connection with certain hospitals); or (c) the employer is a public hospital; or (ca) the employer provides public ambulance services or services that support those services, and the employee is predominantly involved in connection with the provision of those services; or (d) the employer is a hospital described in subsection 57A(4) (which is about hospitals carried on by societies and associations that are rebatable employers); subtract $17,000 from the individual grossed-up non-exempt amount for each employee of the employer referred to in paragraph (c), (ca) or (d), or each employee referred to in paragraph (b), for the year of tax. However, if the individual grossed-up non-exempt amount for such as employee is equal to or less than $17,000, the amount calculated under this step for the employee is nil. | Detailed Reasoning - Application to your circumstances: Entity A, Entity C, Entity D, Entity E and Entity F are each entitled to an FBT exemption under subsection 57A(3) of the FBTAA. On this basis, the $17,000 capping threshold under Step 2 of the Method Statement in subsection 5B(1E) of the FBTAA applies. As stated above, employees from Entity A, Entity B, Entity C and Entity D will be transferred to Entity A (now Entity B) on 1 January 2026, during the FBT year, and will remain employed at Entity A (now Entity B). During the FBT year, these employees will receive benefits from two separate employers during the FBT year who will be subject to FBT liability separately in relation to benefits provided to employees. Under subsection 5B(1E), the old employer will be entitled to a $17,000 capped exemption threshold for each employee employed by them prior to the transfer. Entity A (now Entity B) will be entitled to a separate $17,000 capped exemption threshold for each employee who transferred to them during the FBT year. The provision of benefits in excess of this threshold will be subject to FBT liability. As a consequence of the operation of these provisions, employees who transfer to Entity A (now Entity B) on 1 January 2026 will be able to salary package and, in effect, have access to two separate caps, amounting to $34,000 for the FBT year ending 31 March 2026. Employees who remain with Entity A (now Entity B) will be subject to a $17,000 capped exemption threshold. Whilst Entity A has undergone a name change, there will be no change to the employing entity. Given there is no change to the employer, there will only be one exemption cap applicable to these employees. Any benefits provided in excess of these respective caps will attract FBT. As such, Entity B will not be able to apply the full $17,000 capping threshold under subsection 5B(1E) of the FBTAA in respect of its existing employees for the period DDMMYY to DDMMYY (under its former name) and again from DDMMYY to DDMMYY (under its current name).

Effective DDMMYY, the operations of Entity C, Entity D, Entity E and Entity F will merge with Entity A. | The employment of employees of the other entities will be transferred to Entity A. | Entity A will then be renamed as Entity B. | There will be no change of employer for current employees of Entity A as there is simply a change in the name of the entity. | The merging entities - are entitled to a capped Fringe Benefit Tax (FBT) exemption threshold of $17,000 per employee. The provision of benefits by the former employers and the new employer are treated as separate for FBT purposes. Each former employer will be entitled to the $17,000 capped exemption for benefits provided to employees prior to their transfer. | Entity A which will become Entity B, will be entitled to a separate $17,000 capped exemption for benefits provided to employees after their transfer. | As a consequence of the operation of these provisions, employees who transfer to Entity A on DDMMYY will be able to salary package and, in effect, have access to two separate caps, amounting to $34,000 for the FBT year ending 31 March 2026. | Employees who remain with Entity A (now renamed Entity B) throughout the FBT year will continue to be subject to a $17,000 exemption cap. Any benefits provided in excess of these respective caps will attract FBT. | Reasons for decision: These reasons for decision accompany the Notice of private ruling for Entity B. | This is to explain how we reached our decision. This is not part of the private ruling. | Question: For the purposes of the exemption under s 57A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA),will Entity B (formerly Entity A) be able to apply the full $17,000 capping threshold under subsection 5B(1E) of the FBTAA in respect of its existing employees for the period 1 April 2025 to 31 December 2025 (under its former name) and again from 1 January 2026 to 31 March 2026 (under its current name)?