Product Ruling PR 2025/12
Date of effect: 20 August 2025

What this ruling is about: 1. This Ruling sets out the income tax and fringe benefits tax (FBT) consequences for entities referred to in paragraph 5 of this Ruling that purchase or receive a toll road gift card (Gift Card) offered by eFleetPass Tolling (eFleetPass). 2. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 3. Subject to paragraph 4 of this Ruling, this Ruling addresses the tax consequences associated with the following scenarios: 4. This Ruling does not address: Who this Ruling applies to 5. This Ruling applies to you if on or after 20 August 2025 and on or before 30 June 2028 you are: 6. This Ruling does not apply to you if you are: 7. This Ruling applies from 20 August 2025, the date it was published, to the entities specified in paragraph 5 of this Ruling that enter into the scheme from 20 August 2025 until 30 June 2028. 8. However, the Ruling only applies and may be relied on to the extent that there is no change in the scheme or in the entity's involvement in the scheme. If the scheme carried out is materially different from the scheme described at paragraphs 11 to 18 of this Ruling, this Ruling cannot be relied upon and may be withdrawn or modified. 9. Subject to paragraph 4 of this Ruling and the assumptions in paragraph 10 of this Ruling: Assumptions 10. This Ruling is made on the basis of the following necessary assumptions: 11. The scheme is identified and described in the application for a product ruling as constituted by documents and information received on 10 April 2025 and 31 July 2025. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under freedom of information legislation. 12. For the purposes of describing the scheme, there are no other agreements (whether formal or informal, and whether or not legally enforceable) which an entity referred to in paragraph 5 of this Ruling, or any associate of such entity, will be a party to which are a part of the scheme. Overview of scheme 13. MFA Motorway Holdings Pty Ltd, trading as eFleetPass, is the entity responsible for the development, issuance and management of the Gift Card. 14. eFleetPass purchases toll credits from toll road operators (Operators) at a negotiated rate and resells them as Gift Cards. 15. The Gift Card: 16. Operators will deduct tolls from the card balance using electronic tolling collection (for example electronic tag) or video tolling (for example, licence plate recognition) and will provide eFleetPass with toll usage data to reconcile card balances. 17. Under the terms and conditions of use: 18. Real Toll Cards Pty Ltd, a related entity of eFleetPass, charges a fee per toll trip (Toll Feed-in-Levy) for the provision of toll trip data to the Gift Card holder. As with toll charges, the Toll Feed-in-Levy is deducted from the balance of the Gift Card. Commissioner of Taxation 20 August 2025 Cost of Gift Card deductible for the Employer 19. Section 8-1 allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, provided that the loss or outgoing is not of a capital, private or domestic nature. 20. An outgoing incurred by a business will be necessarily incurred where, in the circumstances, it is reasonably capable of being seen as desirable or appropriate from the point of view of the pursuit of the business ends of the business being carried on for the purpose of earning assessable income (see Magna Alloys & Research Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [1980] FCA 180). 21. Where the Employer purchases the Gift Card and gives it to the Employee to pay for toll charges incurred by the Employee for work-related travel, the cost of the Gift Card is deductible for the Employer under section 8-1 in the income year the purchase is made (that is, at the time it is incurred). The expenditure is appropriate from the point of view of the pursuit of the business ends of the Employer's business and therefore necessarily incurred in carrying on that business. 22. Where the Employer purchases the Gift Card and provides it to the Employee as a gift, including as part of an employee rewards and recognition program, the cost of the Gift Card is also deductible for the Employer under section 8-1 for the same reasons given in paragraph 21 of this Ruling. Receipt of Gift Card by the Employee is not assessable income 23. Whether a gift is assessable income depends on the quality or character of the gift in the hands of the recipient (see Squatting Investment Co Ltd v Commissioner of Taxation [1953] HCA 13; 86 CLR 570 at [627]; 10 ATD 126 at [149]). Consideration is necessary of the whole of the circumstances in which the gift is received. How, in what capacity, and for what reason the recipient received the gift are material factors. 24. Where the Employee receives the Gift Card from the Employer either to pay for toll charges incurred by the Employee (in their own vehicle [3] ) for work-related travel or as a gift (including as part of an employee rewards and recognition program), the Gift Card is a benefit provided to the Employee in respect of, or for or in relation directly or indirectly to, their employment. The value of such a benefit would be included in the assessable income of the Employee under section 15-2, subject to the exceptions discussed in paragraphs 25 and 26 of this Ruling. 25. If the provision of the Gift Card constitutes a fringe benefit received by the Employee, any income that would otherwise arise under section 15-2 will be made non-assessable non-exempt income pursuant to subsection 23L(1) of the ITAA 1936. 26. If the provision of the Gift Card would constitute a fringe benefit received by the Employee but for the fact that it is an exempt benefit for FBT purposes, any income that would otherwise arise under section 15-2 will be exempt income of the Employee pursuant to subsection 23L(1A) of the ITAA 1936. Fringe benefits tax consequences for the Employer 27. Property benefit is defined in subsection 136(1) of the FBTAA by reference to a benefit that is referred to in section 40 of the FBTAA and that does not include a benefit by virtue of a provision of Subdivision A of Division 2 to 10 of Part III of the FBTAA. Section 40 of the FBTAA provides that a property benefit is the provision of property [4] by a person (provider) to another person (recipient) at a particular time. 28. Property fringe benefit is defined in subsection 136(1) of the FBTAA to mean a fringe benefit that is a property benefit. Fringe benefit is defined in subsection 136(1) of the FBTAA and generally relates to a benefit: 29. A Gift Card confers rights on the holder, being the right to redeem toll charges up to the stored value on the Gift Card. These rights, being intangible property, are a property benefit provided to the Employee (recipient) by the Employer (provider) in respect of the Employee's employment. 30. The provision of a Gift Card to the Employee by the Employer will therefore constitute a property fringe benefit under subsection 136(1) of the FBTAA subject to its exclusion as a fringe benefit (by virtue of being an exempt benefit, as discussed at paragraphs 32 to 38 of this Ruling) and subject to paragraph 31 of this Ruling. 31. Where the Employer gives the Gift Card to the Employee to pay for toll charges incurred for work-related travel in a vehicle provided by the Employer, the Employer is liable for the toll charges incurred and is not considered to have provided a benefit to the Employee for FBT purposes. However, if the travel is private and the Gift Card is used by the Employee to pay for toll charges, this may be subject to FBT (subject to paragraphs 32 to 38 of this Ruling). Minor benefit exemption 32. A benefit that is an exempt benefit is excluded from being a fringe benefit under paragraph (g) of the definition of fringe benefit under subsection 136(1) of the FBTAA. 33. Section 58P of the FBTAA provides that a benefit is exempt if it is considered to be a minor benefit (minor benefits exemption). Broadly speaking, the minor benefits exemption exempts benefits if the value of the benefit is less than $300 and it is considered unreasonable to treat the benefit as a fringe benefit having regard to the specified criteria in paragraph 58P(1)(f) of the FBTAA: 34. Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits contains comprehensive guidance on the application of the minor benefit exemption in section 58P of the FBTAA and confirms that the section does not apply to exempt all benefits that have a notional taxable value of less than $300. TR 2007/12 provides that in considering the application of the exemption under section 58P of the FBTAA it is necessary to look to the nature of the benefit provided and give due weight to each of the criteria in paragraph 58P(1)(f) of the FBTAA. The weight given to each criterion will also vary depending on the circumstances surrounding the provision of each benefit. 35. In relation to the criterion under subparagraph 58P(1)(f)(i) of the FBTAA, paragraph 22 of TR 2007/12 relevantly notes: 36. In relation to the criterion under subparagraph 58P(1)(f)(ii) of the FBTAA, paragraph 224 of TR 2007/12 relevantly notes that even if the value of each benefit is below the minor benefits threshold, the sum of the values of the benefits provided, being identical benefits in the current and previous year of tax and those that are reasonably expected to be provided in the future, are all taken into consideration. In the context of the property benefits provided by the Employer in respect of the provision of one or more Gift Cards to the Employee, the sum of the values of the benefits provided will vary on a case-by-case basis. 37. The Employer must therefore give due consideration to the 5 criteria stipulated in paragraph 58P(1)(f) of the FBTAA against the individual facts and circumstances of each property benefit it provides in respect of its provision of Gift Cards to conclude if it is unreasonable to treat the benefit as a fringe benefit. 38. In respect of a property fringe benefit, the minor benefits exemption does not apply pursuant to paragraph 58P(1)(c) of the FBTAA if the property fringe benefit would be an in-house fringe benefit. Subsection 136(1) defines in-house property fringe benefits to mean a property fringe benefit in respect of tangible property. Therefore, since the provision of a Gift Card to an Employee is the provision of intangible property [5] , the Gift Card is not an in-house property fringe benefit and may qualify for the minor benefits exemption. Otherwise deductible rule 39. If the provision of the Gift Card does not qualify as an exempt benefit (including as an exempt minor benefit), the otherwise deductible rule under section 44 of the FBTAA should be considered. 40. An employer is liable to FBT under section 66 of the FBTAA on their fringe benefits taxable amount. In the usual case, and in general terms, this amount is the sum of individual fringe benefits amounts calculated under Divisions 2 to 13 of Part III of the FBTAA. Central to this calculation is working out the taxable value of each fringe benefit provided in respect of an employee's employment by the employer. 41. Where an employee receives a benefit and would have been entitled to an income tax deduction for expenditure on the benefit if the employee had incurred the cost, then the taxable value of the benefit is reduced by the amount of that notional deduction. Known as the otherwise deductible rule under section 44 of the FBTAA, this rule can apply to property fringe benefits and is capable of reducing the taxable value to nil so that no FBT liability arises. 42. The conditions necessary for the application of the otherwise deductible rule are met where the Employer provides the Gift Card to the Employee to use to pay for toll charges incurred by the Employee on work-related travel (in their own vehicle). 43. The Employer must obtain a declaration from the Employee stating the extent to which the property benefit has been used for the purpose of earning assessable income of the Employee and would have been deductible to the Employee. Self-employed individuals 44. The cost of a Gift Card purchased by the Self-employed individual for their work-related travel is deductible under section 8-1 in the income year incurred for the reasons discussed in paragraphs 19 to 21 of this Ruling. 45. Where the Gift Card purchased by the Self-employed individual is used for both work-related travel and private purposes, the cost of the Gift Card is deductible under section 8-1 to the extent that it is used for their work-related travel. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Class of entities or scheme: 13. MFA Motorway Holdings Pty Ltd, trading as eFleetPass, is the entity responsible for the development, issuance and management of the Gift Card. 14. eFleetPass purchases toll credits from toll road operators (Operators) at a negotiated rate and resells them as Gift Cards. 15. The Gift Card: 16. Operators will deduct tolls from the card balance using electronic tolling collection (for example electronic tag) or video tolling (for example, licence plate recognition) and will provide eFleetPass with toll usage data to reconcile card balances. 17. Under the terms and conditions of use: 18. Real Toll Cards Pty Ltd, a related entity of eFleetPass, charges a fee per toll trip (Toll Feed-in-Levy) for the provision of toll trip data to the Gift Card holder. As with toll charges, the Toll Feed-in-Levy is deducted from the balance of the Gift Card. Commissioner of Taxation 20 August 2025 | Cost of Gift Card deductible for the Employer: 19. Section 8-1 allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, provided that the loss or outgoing is not of a capital, private or domestic nature. 20. An outgoing incurred by a business will be necessarily incurred where, in the circumstances, it is reasonably capable of being seen as desirable or appropriate from the point of view of the pursuit of the business ends of the business being carried on for the purpose of earning assessable income (see Magna Alloys & Research Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [1980] FCA 180). 21. Where the Employer purchases the Gift Card and gives it to the Employee to pay for toll charges incurred by the Employee for work-related travel, the cost of the Gift Card is deductible for the Employer under section 8-1 in the income year the purchase is made (that is, at the time it is incurred). The expenditure is appropriate from the point of view of the pursuit of the business ends of the Employer's business and therefore necessarily incurred in carrying on that business. 22. Where the Employer purchases the Gift Card and provides it to the Employee as a gift, including as part of an employee rewards and recognition program, the cost of the Gift Card is also deductible for the Employer under section 8-1 for the same reasons given in paragraph 21 of this Ruling. | Receipt of Gift Card by the Employee is not assessable income: 23. Whether a gift is assessable income depends on the quality or character of the gift in the hands of the recipient (see Squatting Investment Co Ltd v Commissioner of Taxation [1953] HCA 13; 86 CLR 570 at [627]; 10 ATD 126 at [149]). Consideration is necessary of the whole of the circumstances in which the gift is received. How, in what capacity, and for what reason the recipient received the gift are material factors. 24. Where the Employee receives the Gift Card from the Employer either to pay for toll charges incurred by the Employee (in their own vehicle [3] ) for work-related travel or as a gift (including as part of an employee rewards and recognition program), the Gift Card is a benefit provided to the Employee in respect of, or for or in relation directly or indirectly to, their employment. The value of such a benefit would be included in the assessable income of the Employee under section 15-2, subject to the exceptions discussed in paragraphs 25 and 26 of this Ruling. 25. If the provision of the Gift Card constitutes a fringe benefit received by the Employee, any income that would otherwise arise under section 15-2 will be made non-assessable non-exempt income pursuant to subsection 23L(1) of the ITAA 1936. 26. If the provision of the Gift Card would constitute a fringe benefit received by the Employee but for the fact that it is an exempt benefit for FBT purposes, any income that would otherwise arise under section 15-2 will be exempt income of the Employee pursuant to subsection 23L(1A) of the ITAA 1936. | Fringe benefits tax consequences for the Employer: 27. Property benefit is defined in subsection 136(1) of the FBTAA by reference to a benefit that is referred to in section 40 of the FBTAA and that does not include a benefit by virtue of a provision of Subdivision A of Division 2 to 10 of Part III of the FBTAA. Section 40 of the FBTAA provides that a property benefit is the provision of property [4] by a person (provider) to another person (recipient) at a particular time. 28. Property fringe benefit is defined in subsection 136(1) of the FBTAA to mean a fringe benefit that is a property benefit. Fringe benefit is defined in subsection 136(1) of the FBTAA and generally relates to a benefit: 29. A Gift Card confers rights on the holder, being the right to redeem toll charges up to the stored value on the Gift Card. These rights, being intangible property, are a property benefit provided to the Employee (recipient) by the Employer (provider) in respect of the Employee's employment. 30. The provision of a Gift Card to the Employee by the Employer will therefore constitute a property fringe benefit under subsection 136(1) of the FBTAA subject to its exclusion as a fringe benefit (by virtue of being an exempt benefit, as discussed at paragraphs 32 to 38 of this Ruling) and subject to paragraph 31 of this Ruling. 31. Where the Employer gives the Gift Card to the Employee to pay for toll charges incurred for work-related travel in a vehicle provided by the Employer, the Employer is liable for the toll charges incurred and is not considered to have provided a benefit to the Employee for FBT purposes. However, if the travel is private and the Gift Card is used by the Employee to pay for toll charges, this may be subject to FBT (subject to paragraphs 32 to 38 of this Ruling). | Minor benefit exemption: 32. A benefit that is an exempt benefit is excluded from being a fringe benefit under paragraph (g) of the definition of fringe benefit under subsection 136(1) of the FBTAA. 33. Section 58P of the FBTAA provides that a benefit is exempt if it is considered to be a minor benefit (minor benefits exemption). Broadly speaking, the minor benefits exemption exempts benefits if the value of the benefit is less than $300 and it is considered unreasonable to treat the benefit as a fringe benefit having regard to the specified criteria in paragraph 58P(1)(f) of the FBTAA: 34. Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits contains comprehensive guidance on the application of the minor benefit exemption in section 58P of the FBTAA and confirms that the section does not apply to exempt all benefits that have a notional taxable value of less than $300. TR 2007/12 provides that in considering the application of the exemption under section 58P of the FBTAA it is necessary to look to the nature of the benefit provided and give due weight to each of the criteria in paragraph 58P(1)(f) of the FBTAA. The weight given to each criterion will also vary depending on the circumstances surrounding the provision of each benefit. 35. In relation to the criterion under subparagraph 58P(1)(f)(i) of the FBTAA, paragraph 22 of TR 2007/12 relevantly notes: 36. In relation to the criterion under subparagraph 58P(1)(f)(ii) of the FBTAA, paragraph 224 of TR 2007/12 relevantly notes that even if the value of each benefit is below the minor benefits threshold, the sum of the values of the benefits provided, being identical benefits in the current and previous year of tax and those that are reasonably expected to be provided in the future, are all taken into consideration. In the context of the property benefits provided by the Employer in respect of the provision of one or more Gift Cards to the Employee, the sum of the values of the benefits provided will vary on a case-by-case basis. 37. The Employer must therefore give due consideration to the 5 criteria stipulated in paragraph 58P(1)(f) of the FBTAA against the individual facts and circumstances of each property benefit it provides in respect of its provision of Gift Cards to conclude if it is unreasonable to treat the benefit as a fringe benefit. 38. In respect of a property fringe benefit, the minor benefits exemption does not apply pursuant to paragraph 58P(1)(c) of the FBTAA if the property fringe benefit would be an in-house fringe benefit. Subsection 136(1) defines in-house property fringe benefits to mean a property fringe benefit in respect of tangible property. Therefore, since the provision of a Gift Card to an Employee is the provision of intangible property [5] , the Gift Card is not an in-house property fringe benefit and may qualify for the minor benefits exemption. | Otherwise deductible rule: 39. If the provision of the Gift Card does not qualify as an exempt benefit (including as an exempt minor benefit), the otherwise deductible rule under section 44 of the FBTAA should be considered. 40. An employer is liable to FBT under section 66 of the FBTAA on their fringe benefits taxable amount. In the usual case, and in general terms, this amount is the sum of individual fringe benefits amounts calculated under Divisions 2 to 13 of Part III of the FBTAA. Central to this calculation is working out the taxable value of each fringe benefit provided in respect of an employee's employment by the employer. 41. Where an employee receives a benefit and would have been entitled to an income tax deduction for expenditure on the benefit if the employee had incurred the cost, then the taxable value of the benefit is reduced by the amount of that notional deduction. Known as the otherwise deductible rule under section 44 of the FBTAA, this rule can apply to property fringe benefits and is capable of reducing the taxable value to nil so that no FBT liability arises. 42. The conditions necessary for the application of the otherwise deductible rule are met where the Employer provides the Gift Card to the Employee to use to pay for toll charges incurred by the Employee on work-related travel (in their own vehicle). 43. The Employer must obtain a declaration from the Employee stating the extent to which the property benefit has been used for the purpose of earning assessable income of the Employee and would have been deductible to the Employee. | Self-employed individuals: 44. The cost of a Gift Card purchased by the Self-employed individual for their work-related travel is deductible under section 8-1 in the income year incurred for the reasons discussed in paragraphs 19 to 21 of this Ruling. 45. Where the Gift Card purchased by the Self-employed individual is used for both work-related travel and private purposes, the cost of the Gift Card is deductible under section 8-1 to the extent that it is used for their work-related travel. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Ruling: 1. This Ruling sets out the income tax and fringe benefits tax (FBT) consequences for entities referred to in paragraph 5 of this Ruling that purchase or receive a toll road gift card (Gift Card) offered by eFleetPass Tolling (eFleetPass). 2. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. 3. Subject to paragraph 4 of this Ruling, this Ruling addresses the tax consequences associated with the following scenarios: 4. This Ruling does not address: | Who this Ruling applies to: 5. This Ruling applies to you if on or after 20 August 2025 and on or before 30 June 2028 you are: 6. This Ruling does not apply to you if you are: 7. This Ruling applies from 20 August 2025, the date it was published, to the entities specified in paragraph 5 of this Ruling that enter into the scheme from 20 August 2025 until 30 June 2028. 8. However, the Ruling only applies and may be relied on to the extent that there is no change in the scheme or in the entity's involvement in the scheme. If the scheme carried out is materially different from the scheme described at paragraphs 11 to 18 of this Ruling, this Ruling cannot be relied upon and may be withdrawn or modified. 9. Subject to paragraph 4 of this Ruling and the assumptions in paragraph 10 of this Ruling: | Assumptions: 10. This Ruling is made on the basis of the following necessary assumptions: 11. The scheme is identified and described in the application for a product ruling as constituted by documents and information received on 10 April 2025 and 31 July 2025. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under freedom of information legislation. 12. For the purposes of describing the scheme, there are no other agreements (whether formal or informal, and whether or not legally enforceable) which an entity referred to in paragraph 5 of this Ruling, or any associate of such entity, will be a party to which are a part of the scheme. | Overview of scheme: 13. MFA Motorway Holdings Pty Ltd, trading as eFleetPass, is the entity responsible for the development, issuance and management of the Gift Card. 14. eFleetPass purchases toll credits from toll road operators (Operators) at a negotiated rate and resells them as Gift Cards. 15. The Gift Card: 16. Operators will deduct tolls from the card balance using electronic tolling collection (for example electronic tag) or video tolling (for example, licence plate recognition) and will provide eFleetPass with toll usage data to reconcile card balances. 17. Under the terms and conditions of use: 18. Real Toll Cards Pty Ltd, a related entity of eFleetPass, charges a fee per toll trip (Toll Feed-in-Levy) for the provision of toll trip data to the Gift Card holder. As with toll charges, the Toll Feed-in-Levy is deducted from the balance of the Gift Card. Commissioner of Taxation 20 August 2025 | Cost of Gift Card deductible for the Employer: 19. Section 8-1 allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, provided that the loss or outgoing is not of a capital, private or domestic nature. 20. An outgoing incurred by a business will be necessarily incurred where, in the circumstances, it is reasonably capable of being seen as desirable or appropriate from the point of view of the pursuit of the business ends of the business being carried on for the purpose of earning assessable income (see Magna Alloys & Research Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [1980] FCA 180). 21. Where the Employer purchases the Gift Card and gives it to the Employee to pay for toll charges incurred by the Employee for work-related travel, the cost of the Gift Card is deductible for the Employer under section 8-1 in the income year the purchase is made (that is, at the time it is incurred). The expenditure is appropriate from the point of view of the pursuit of the business ends of the Employer's business and therefore necessarily incurred in carrying on that business. 22. Where the Employer purchases the Gift Card and provides it to the Employee as a gift, including as part of an employee rewards and recognition program, the cost of the Gift Card is also deductible for the Employer under section 8-1 for the same reasons given in paragraph 21 of this Ruling. | Receipt of Gift Card by the Employee is not assessable income: 23. Whether a gift is assessable income depends on the quality or character of the gift in the hands of the recipient (see Squatting Investment Co Ltd v Commissioner of Taxation [1953] HCA 13; 86 CLR 570 at [627]; 10 ATD 126 at [149]). Consideration is necessary of the whole of the circumstances in which the gift is received. How, in what capacity, and for what reason the recipient received the gift are material factors. 24. Where the Employee receives the Gift Card from the Employer either to pay for toll charges incurred by the Employee (in their own vehicle [3] ) for work-related travel or as a gift (including as part of an employee rewards and recognition program), the Gift Card is a benefit provided to the Employee in respect of, or for or in relation directly or indirectly to, their employment. The value of such a benefit would be included in the assessable income of the Employee under section 15-2, subject to the exceptions discussed in paragraphs 25 and 26 of this Ruling. 25. If the provision of the Gift Card constitutes a fringe benefit received by the Employee, any income that would otherwise arise under section 15-2 will be made non-assessable non-exempt income pursuant to subsection 23L(1) of the ITAA 1936. 26. If the provision of the Gift Card would constitute a fringe benefit received by the Employee but for the fact that it is an exempt benefit for FBT purposes, any income that would otherwise arise under section 15-2 will be exempt income of the Employee pursuant to subsection 23L(1A) of the ITAA 1936. | Fringe benefits tax consequences for the Employer: 27. Property benefit is defined in subsection 136(1) of the FBTAA by reference to a benefit that is referred to in section 40 of the FBTAA and that does not include a benefit by virtue of a provision of Subdivision A of Division 2 to 10 of Part III of the FBTAA. Section 40 of the FBTAA provides that a property benefit is the provision of property [4] by a person (provider) to another person (recipient) at a particular time. 28. Property fringe benefit is defined in subsection 136(1) of the FBTAA to mean a fringe benefit that is a property benefit. Fringe benefit is defined in subsection 136(1) of the FBTAA and generally relates to a benefit: 29. A Gift Card confers rights on the holder, being the right to redeem toll charges up to the stored value on the Gift Card. These rights, being intangible property, are a property benefit provided to the Employee (recipient) by the Employer (provider) in respect of the Employee's employment. 30. The provision of a Gift Card to the Employee by the Employer will therefore constitute a property fringe benefit under subsection 136(1) of the FBTAA subject to its exclusion as a fringe benefit (by virtue of being an exempt benefit, as discussed at paragraphs 32 to 38 of this Ruling) and subject to paragraph 31 of this Ruling. 31. Where the Employer gives the Gift Card to the Employee to pay for toll charges incurred for work-related travel in a vehicle provided by the Employer, the Employer is liable for the toll charges incurred and is not considered to have provided a benefit to the Employee for FBT purposes. However, if the travel is private and the Gift Card is used by the Employee to pay for toll charges, this may be subject to FBT (subject to paragraphs 32 to 38 of this Ruling). | Minor benefit exemption: 32. A benefit that is an exempt benefit is excluded from being a fringe benefit under paragraph (g) of the definition of fringe benefit under subsection 136(1) of the FBTAA. 33. Section 58P of the FBTAA provides that a benefit is exempt if it is considered to be a minor benefit (minor benefits exemption). Broadly speaking, the minor benefits exemption exempts benefits if the value of the benefit is less than $300 and it is considered unreasonable to treat the benefit as a fringe benefit having regard to the specified criteria in paragraph 58P(1)(f) of the FBTAA: 34. Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits contains comprehensive guidance on the application of the minor benefit exemption in section 58P of the FBTAA and confirms that the section does not apply to exempt all benefits that have a notional taxable value of less than $300. TR 2007/12 provides that in considering the application of the exemption under section 58P of the FBTAA it is necessary to look to the nature of the benefit provided and give due weight to each of the criteria in paragraph 58P(1)(f) of the FBTAA. The weight given to each criterion will also vary depending on the circumstances surrounding the provision of each benefit. 35. In relation to the criterion under subparagraph 58P(1)(f)(i) of the FBTAA, paragraph 22 of TR 2007/12 relevantly notes: 36. In relation to the criterion under subparagraph 58P(1)(f)(ii) of the FBTAA, paragraph 224 of TR 2007/12 relevantly notes that even if the value of each benefit is below the minor benefits threshold, the sum of the values of the benefits provided, being identical benefits in the current and previous year of tax and those that are reasonably expected to be provided in the future, are all taken into consideration. In the context of the property benefits provided by the Employer in respect of the provision of one or more Gift Cards to the Employee, the sum of the values of the benefits provided will vary on a case-by-case basis. 37. The Employer must therefore give due consideration to the 5 criteria stipulated in paragraph 58P(1)(f) of the FBTAA against the individual facts and circumstances of each property benefit it provides in respect of its provision of Gift Cards to conclude if it is unreasonable to treat the benefit as a fringe benefit. 38. In respect of a property fringe benefit, the minor benefits exemption does not apply pursuant to paragraph 58P(1)(c) of the FBTAA if the property fringe benefit would be an in-house fringe benefit. Subsection 136(1) defines in-house property fringe benefits to mean a property fringe benefit in respect of tangible property. Therefore, since the provision of a Gift Card to an Employee is the provision of intangible property [5] , the Gift Card is not an in-house property fringe benefit and may qualify for the minor benefits exemption. | Otherwise deductible rule: 39. If the provision of the Gift Card does not qualify as an exempt benefit (including as an exempt minor benefit), the otherwise deductible rule under section 44 of the FBTAA should be considered. 40. An employer is liable to FBT under section 66 of the FBTAA on their fringe benefits taxable amount. In the usual case, and in general terms, this amount is the sum of individual fringe benefits amounts calculated under Divisions 2 to 13 of Part III of the FBTAA. Central to this calculation is working out the taxable value of each fringe benefit provided in respect of an employee's employment by the employer. 41. Where an employee receives a benefit and would have been entitled to an income tax deduction for expenditure on the benefit if the employee had incurred the cost, then the taxable value of the benefit is reduced by the amount of that notional deduction. Known as the otherwise deductible rule under section 44 of the FBTAA, this rule can apply to property fringe benefits and is capable of reducing the taxable value to nil so that no FBT liability arises. 42. The conditions necessary for the application of the otherwise deductible rule are met where the Employer provides the Gift Card to the Employee to use to pay for toll charges incurred by the Employee on work-related travel (in their own vehicle). 43. The Employer must obtain a declaration from the Employee stating the extent to which the property benefit has been used for the purpose of earning assessable income of the Employee and would have been deductible to the Employee. | Self-employed individuals: 44. The cost of a Gift Card purchased by the Self-employed individual for their work-related travel is deductible under section 8-1 in the income year incurred for the reasons discussed in paragraphs 19 to 21 of this Ruling. 45. Where the Gift Card purchased by the Self-employed individual is used for both work-related travel and private purposes, the cost of the Gift Card is deductible under section 8-1 to the extent that it is used for their work-related travel. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


Appendix: Cost of Gift Card deductible for the Employer: 19. Section 8-1 allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, provided that the loss or outgoing is not of a capital, private or domestic nature. 20. An outgoing incurred by a business will be necessarily incurred where, in the circumstances, it is reasonably capable of being seen as desirable or appropriate from the point of view of the pursuit of the business ends of the business being carried on for the purpose of earning assessable income (see Magna Alloys & Research Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [1980] FCA 180). 21. Where the Employer purchases the Gift Card and gives it to the Employee to pay for toll charges incurred by the Employee for work-related travel, the cost of the Gift Card is deductible for the Employer under section 8-1 in the income year the purchase is made (that is, at the time it is incurred). The expenditure is appropriate from the point of view of the pursuit of the business ends of the Employer's business and therefore necessarily incurred in carrying on that business. 22. Where the Employer purchases the Gift Card and provides it to the Employee as a gift, including as part of an employee rewards and recognition program, the cost of the Gift Card is also deductible for the Employer under section 8-1 for the same reasons given in paragraph 21 of this Ruling. | Receipt of Gift Card by the Employee is not assessable income: 23. Whether a gift is assessable income depends on the quality or character of the gift in the hands of the recipient (see Squatting Investment Co Ltd v Commissioner of Taxation [1953] HCA 13; 86 CLR 570 at [627]; 10 ATD 126 at [149]). Consideration is necessary of the whole of the circumstances in which the gift is received. How, in what capacity, and for what reason the recipient received the gift are material factors. 24. Where the Employee receives the Gift Card from the Employer either to pay for toll charges incurred by the Employee (in their own vehicle [3] ) for work-related travel or as a gift (including as part of an employee rewards and recognition program), the Gift Card is a benefit provided to the Employee in respect of, or for or in relation directly or indirectly to, their employment. The value of such a benefit would be included in the assessable income of the Employee under section 15-2, subject to the exceptions discussed in paragraphs 25 and 26 of this Ruling. 25. If the provision of the Gift Card constitutes a fringe benefit received by the Employee, any income that would otherwise arise under section 15-2 will be made non-assessable non-exempt income pursuant to subsection 23L(1) of the ITAA 1936. 26. If the provision of the Gift Card would constitute a fringe benefit received by the Employee but for the fact that it is an exempt benefit for FBT purposes, any income that would otherwise arise under section 15-2 will be exempt income of the Employee pursuant to subsection 23L(1A) of the ITAA 1936. | Fringe benefits tax consequences for the Employer: 27. Property benefit is defined in subsection 136(1) of the FBTAA by reference to a benefit that is referred to in section 40 of the FBTAA and that does not include a benefit by virtue of a provision of Subdivision A of Division 2 to 10 of Part III of the FBTAA. Section 40 of the FBTAA provides that a property benefit is the provision of property [4] by a person (provider) to another person (recipient) at a particular time. 28. Property fringe benefit is defined in subsection 136(1) of the FBTAA to mean a fringe benefit that is a property benefit. Fringe benefit is defined in subsection 136(1) of the FBTAA and generally relates to a benefit: 29. A Gift Card confers rights on the holder, being the right to redeem toll charges up to the stored value on the Gift Card. These rights, being intangible property, are a property benefit provided to the Employee (recipient) by the Employer (provider) in respect of the Employee's employment. 30. The provision of a Gift Card to the Employee by the Employer will therefore constitute a property fringe benefit under subsection 136(1) of the FBTAA subject to its exclusion as a fringe benefit (by virtue of being an exempt benefit, as discussed at paragraphs 32 to 38 of this Ruling) and subject to paragraph 31 of this Ruling. 31. Where the Employer gives the Gift Card to the Employee to pay for toll charges incurred for work-related travel in a vehicle provided by the Employer, the Employer is liable for the toll charges incurred and is not considered to have provided a benefit to the Employee for FBT purposes. However, if the travel is private and the Gift Card is used by the Employee to pay for toll charges, this may be subject to FBT (subject to paragraphs 32 to 38 of this Ruling). | Minor benefit exemption: 32. A benefit that is an exempt benefit is excluded from being a fringe benefit under paragraph (g) of the definition of fringe benefit under subsection 136(1) of the FBTAA. 33. Section 58P of the FBTAA provides that a benefit is exempt if it is considered to be a minor benefit (minor benefits exemption). Broadly speaking, the minor benefits exemption exempts benefits if the value of the benefit is less than $300 and it is considered unreasonable to treat the benefit as a fringe benefit having regard to the specified criteria in paragraph 58P(1)(f) of the FBTAA: 34. Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits contains comprehensive guidance on the application of the minor benefit exemption in section 58P of the FBTAA and confirms that the section does not apply to exempt all benefits that have a notional taxable value of less than $300. TR 2007/12 provides that in considering the application of the exemption under section 58P of the FBTAA it is necessary to look to the nature of the benefit provided and give due weight to each of the criteria in paragraph 58P(1)(f) of the FBTAA. The weight given to each criterion will also vary depending on the circumstances surrounding the provision of each benefit. 35. In relation to the criterion under subparagraph 58P(1)(f)(i) of the FBTAA, paragraph 22 of TR 2007/12 relevantly notes: 36. In relation to the criterion under subparagraph 58P(1)(f)(ii) of the FBTAA, paragraph 224 of TR 2007/12 relevantly notes that even if the value of each benefit is below the minor benefits threshold, the sum of the values of the benefits provided, being identical benefits in the current and previous year of tax and those that are reasonably expected to be provided in the future, are all taken into consideration. In the context of the property benefits provided by the Employer in respect of the provision of one or more Gift Cards to the Employee, the sum of the values of the benefits provided will vary on a case-by-case basis. 37. The Employer must therefore give due consideration to the 5 criteria stipulated in paragraph 58P(1)(f) of the FBTAA against the individual facts and circumstances of each property benefit it provides in respect of its provision of Gift Cards to conclude if it is unreasonable to treat the benefit as a fringe benefit. 38. In respect of a property fringe benefit, the minor benefits exemption does not apply pursuant to paragraph 58P(1)(c) of the FBTAA if the property fringe benefit would be an in-house fringe benefit. Subsection 136(1) defines in-house property fringe benefits to mean a property fringe benefit in respect of tangible property. Therefore, since the provision of a Gift Card to an Employee is the provision of intangible property [5] , the Gift Card is not an in-house property fringe benefit and may qualify for the minor benefits exemption. | Otherwise deductible rule: 39. If the provision of the Gift Card does not qualify as an exempt benefit (including as an exempt minor benefit), the otherwise deductible rule under section 44 of the FBTAA should be considered. 40. An employer is liable to FBT under section 66 of the FBTAA on their fringe benefits taxable amount. In the usual case, and in general terms, this amount is the sum of individual fringe benefits amounts calculated under Divisions 2 to 13 of Part III of the FBTAA. Central to this calculation is working out the taxable value of each fringe benefit provided in respect of an employee's employment by the employer. 41. Where an employee receives a benefit and would have been entitled to an income tax deduction for expenditure on the benefit if the employee had incurred the cost, then the taxable value of the benefit is reduced by the amount of that notional deduction. Known as the otherwise deductible rule under section 44 of the FBTAA, this rule can apply to property fringe benefits and is capable of reducing the taxable value to nil so that no FBT liability arises. 42. The conditions necessary for the application of the otherwise deductible rule are met where the Employer provides the Gift Card to the Employee to use to pay for toll charges incurred by the Employee on work-related travel (in their own vehicle). 43. The Employer must obtain a declaration from the Employee stating the extent to which the property benefit has been used for the purpose of earning assessable income of the Employee and would have been deductible to the Employee. | Self-employed individuals: 44. The cost of a Gift Card purchased by the Self-employed individual for their work-related travel is deductible under section 8-1 in the income year incurred for the reasons discussed in paragraphs 19 to 21 of this Ruling. 45. Where the Gift Card purchased by the Self-employed individual is used for both work-related travel and private purposes, the cost of the Gift Card is deductible under section 8-1 to the extent that it is used for their work-related travel. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | This Ruling has been given on the basis that the entity who applied for the Ruling, and their associates, will abide by strict terms of use. Any failure to comply with the terms of use may lead to the withdrawal of this Ruling. | Potential participants must form their own view about the commercial and financial viability of the product. The Commissioner recommends a financial (or other) adviser be consulted for such information. | have been or can reasonably be expected to be provided; | it would be concluded that it would be unreasonable to treat the minor benefit as a fringe benefit in relation to the employer in relation to the current year of tax; | In applying the 'infrequency and irregularity' criterion, it is not appropriate to stipulate the maximum number of times associated benefits that are identical or similar to a minor benefit, or benefits in connection with the minor benefit, can be provided before the criterion is not met. However, the more often and regularly those benefits are provided, the less likely it is that this criterion would be met.


Related rulings: TR 2007/12
Legislative references: FBTAA 1986 Pt III Div 2 FBTAA 1986 Pt III Div 2 Subdiv A FBTAA 1986 Pt III Div 3 FBTAA 1986 Pt III Div 3 Subdiv A FBTAA 1986 Pt III Div 4 FBTAA 1986 Pt III Div 4 Subdiv A FBTAA 1986 Pt III Div 5 FBTAA 1986 Pt III Div 5 Subdiv A FBTAA 1986 Pt III Div 6 FBTAA 1986 Pt III Div 6 Subdiv A FBTAA 1986 Pt III Div 7 FBTAA 1986 Pt III Div 7 Subdiv A FBTAA 1986 Pt III Div 9 FBTAA 1986 Pt III Div 9 Subdiv A FBTAA 1986 Pt III Div 9A FBTAA 1986 Pt III Div 9A Subdiv A FBTAA 1986 Pt III Div 10 FBTAA 1986 Pt III Div 10 Subdiv A FBTAA 1986 Pt III Div 10A FBTAA 1986 Pt III Div 10A Subdiv A FBTAA 1986 Pt III Div 11 FBTAA 1986 40 FBTAA 1986 44 FBTAA 1986 Pt III Div 12 FBTAA 1986 Pt III Div 13 FBTAA 1986 58P FBTAA 1986 58P(1)(c) FBTAA 1986 58P(1)(f) FBTAA 1986 58P(1)(f)(i) FBTAA 1986 58P(1)(f)(ii) FBTAA 1986 66 FBTAA 1986 67 FBTAA 1986 136(1) FBTAA 1986 136(1)(g) ITAA 1936 23L(1) ITAA 1936 23L(1A) ITAA 1936 Pt IVA ITAA 1997 8-1 ITAA 1997 15-2 ITAA 1997 27-5
Case references: Squatting Investment Co Ltd v Commissioner of Taxation [1953] HCA 13 86 CLR 570 [1953] ALR 366 26 ALR 658 10 ATD 126
Other references: ATO ID 2010/135