Most Australian employees first notice the phrase Reportable Fringe Benefits Amount when they open their income statement in myGov or read the year-end payment summary provided by payroll. The figure often looks surprisingly large, yet it is not added to taxable income and it does not increase the amount of tax shown on the notice of assessment. This guide explains in plain English what the figure means, why it appears, how it is calculated, and what practical steps an employee should take when the number seems wrong or when planning future salary packaging arrangements.
Understanding Reportable Fringe Benefits Amount
A fringe benefit is a non-cash reward that an employer provides in respect of employment. Common examples include the personal use of a salary-packaged car, an employer-paid gym membership, or assistance with private school fees. When the total taxable value of such benefits exceeds two thousand dollars during the fringe benefits tax year, which runs from 1 April to 31 March, the employer must disclose a grossed-up value called the Reportable Fringe Benefits Amount. The figure is designed to show the equivalent pre-tax salary that an employee would have needed to earn at the top marginal rate in order to purchase the benefit with after-tax cash.
The obligation to report arises from the Fringe Benefits Tax Assessment Act 1986, and the Australian Taxation Office enforces it through Single Touch Payroll and, in limited cases, paper payment summaries. While the employer pays any fringe benefits tax that is due, the grossed-up value still has an impact on several means tests that apply to employees, as we will explore shortly.
Why RFBA appears on payment summaries and income statements
The fringe benefits tax year finishes on 31 March each year. Employers then have until mid-July to finalise Single Touch Payroll information for the corresponding income year that ends on 30 June. When the taxable value of an employee’s reportable benefits during that twelve-month FBT period exceeds the two thousand dollar threshold, the employer multiplies the taxable value by the type two gross-up rate, currently 1.8868, and reports the outcome as the RFBA for that employee. The figure then flows through to the employee’s income statement, visible in myGov, or onto the PAYG payment summary where STP is not used.
Employees sometimes worry that the number means they have been paid extra salary that is missing from the year-to-date totals. That is not the case. The number only appears because legislation requires transparent disclosure of higher-value fringe benefits. The purpose is to give government agencies, lenders, and other bodies a fuller picture of an individual’s capacity to contribute or repay, without changing the individual’s taxable income.
The tax impact or lack of it
An RFBA does not create additional income tax. You do not add it to salary or wages when preparing an individual income tax return, and the figure is ignored when the Australian Taxation Office calculates the basic amount of tax owing. Despite this, the figure is far from meaningless. It feeds into a wide range of income tests, including the Medicare levy surcharge, the private health insurance rebate, Higher Education Loan Program or HELP repayments, Division 293 tax on concessional super contributions for higher earners, Family Tax Benefit, child support assessments, and other social security entitlements.
Consider a worker with taxable income of ninety thousand dollars who also has an RFBA of fifteen thousand dollars. For income tax purposes the figure remains ninety thousand. For the Medicare levy surcharge test, however, the Australian Taxation Office will assess the individual on one hundred and five thousand, potentially pushing the person into the surcharge zone unless they hold suitable private hospital insurance. The same uplift can speed up HELP debt repayments or reduce or eliminate eligibility for certain family payments. In many cases, employees first learn about the relevance of RFBA when an expected government benefit is lower than planned.
How employers calculate RFBA
Employers must identify all reportable benefits provided between 1 April and 31 March. They calculate the taxable value of each benefit under fringe benefits tax rules that are often quite different from ordinary market value measures. Once the total taxable value for an employee exceeds two thousand dollars the entire amount is grossed up, not merely the excess over two thousand. Employers use the type two gross-up rate when they cannot claim an input tax credit for GST on the benefit. This rate has sat at 1.8868 for several FBT years in a row.
The table below shows the relationship between taxable value, gross-up factor, and reportable amount.
| Taxable value of benefits | Gross-up factor | Reportable Fringe Benefits Amount |
|---|---|---|
| 2 000 | 1.8868 | 3 773 |
| 5 000 | 1.8868 | 9 434 |
| 10 000 | 1.8868 | 18 868 |
| 20 000 | 1.8868 | 37 736 |
The higher figure is the one that appears on the payment summary. Employees sometimes feel shocked to see nearly thirty-eight thousand dollars reported when the employer only covered twenty thousand dollars of actual expenses. The aim is parity with a notional gross salary that would leave the same net cost after tax at the highest personal rate plus Medicare levy.
Types of benefits that contribute to RFBA
Most salary-packaged items that relieve an employee from private expenditure will trigger RFBA reporting once the taxable value exceeds the threshold. Car fringe benefits, including novated leases, are the most familiar. Expense payment benefits, such as an employer that pays an employee’s private gym fees, are another common source. Housing benefits, loan benefits, and living-away-from-home allowances can also contribute. Some minor benefits and certain work-related items are specifically excluded, for example portable electronic devices provided primarily for work, relocation expenses within set limits, or low-value meal entertainment in specific circumstances. When an item is exempt or specifically not reportable, it does not influence RFBA.
Employees should read salary packaging agreements carefully and ask whether a planned benefit will be reportable. A novated lease that appears tax efficient when viewed in isolation could have flow-on effects for HELP repayments or the Medicare levy surcharge because of the grossed-up amount.
Life situations that RFBA can influence
The Australian taxation and transfer system relies on adjusted taxable income calculations to set thresholds for many concessions and obligations. RFBA forms part of adjusted taxable income. Here are the most frequent areas where employees feel the impact.
Medicare levy surcharge liability increases if adjusted income exceeds ninety thousand dollars for singles or one hundred and eighty thousand for families, plus adjustments for children.
The private health insurance rebate phases out across the same thresholds. Employees with significant RFBA and no change in cash salary sometimes notice a sudden fall in their rebate at renewal time.
HELP and TSL repayments are based on repayment income, which includes RFBA. A higher RFBA can push an employee to a higher repayment percentage.
Division 293 tax applies an extra fifteen per cent on concessional super contributions once adjusted income exceeds two hundred and fifty thousand. A large RFBA may tip a senior professional over that line.
Family Tax Benefit parts A and B use adjusted taxable income, and the reduction in benefit is often significant once RFBA enters the calculation.
Child support assessments include RFBA when the Services Australia system calculates the capacity of each parent to contribute.
These effects reinforce that while RFBA is not taxed directly, it still matters to take-home money.
Checking your RFBA figure and actions for errors
Mistakes can occur, particularly if an employee changes work pattern late in the FBT year, repays part of a benefit, or leaves employment before 30 June. The first step when an amount appears inaccurate is to ask payroll or human resources for an itemised list of fringe benefits that make up the calculation. The employer can lodge an amended Single Touch Payroll report or issue a revised payment summary if required. Employees do not self-edit the figure in the tax return because the systems import RFBA directly from the employer file. Waiting for the employer to correct the record prevents later ATO data-matching discrepancies.
Keeping personal records such as novated lease statements, packaging reports, or correspondence about employer-paid expenses will help in any dispute. The Australian Taxation Office expects employers to retain evidence, but employees benefit from independent confirmation if employment ends before an issue is settled. In rare cases where an employer refuses to investigate, an employee can ask the ATO for guidance, although the regulator will normally direct the person back to the employer in the first instance.
Strategies to reduce future RFBA
Employees who find that RFBA interferes with their government benefits or triggers unwanted surcharges can take several practical steps. One approach is to make employee contributions from after-tax salary toward the fringe benefit, particularly with car fringe benefits. The contribution reduces the taxable value dollar for dollar, which in turn lowers or even eliminates the reportable figure. Another option is to select benefits that are specifically exempt from fringe benefits tax or that, while taxable, are not reportable. Examples include portable electronic devices mainly for work use, or certain work-related training expenses paid by an employer. Sometimes the best strategy is simply to accept a higher base salary and purchase the item privately, particularly when the benefit’s tax status is marginal.
The decision involves more than pure dollars. Convenience, employer purchasing power, and cash-flow timing also play roles. A qualified tax adviser or salary packaging consultant can model net outcomes that incorporate the effect of RFBA on Medicare levy surcharge and other tests.
Frequently asked questions
What does RFBA stand for
RFBA stands for Reportable Fringe Benefits Amount. It is the grossed-up value of certain fringe benefits provided to an employee when the taxable value of those benefits for the FBT year exceeds two thousand dollars.
Do I include RFBA in my tax return
You do not include RFBA as assessable income when you lodge your individual tax return. The figure is prefilled by the ATO for information only and has no impact on your basic tax calculation.
Why is my RFBA higher than the value of the benefit
The law requires employers to report the grossed-up value. Grossing up uses a factor of 1.8868 for most benefits, which converts the taxable value into an amount that represents the salary that would buy the benefit after the highest marginal tax rate and Medicare levy.
What if I left my job between April and June
The RFBA still relates to the benefits you enjoyed during the FBT year that ended on 31 March. Leaving employment before 30 June does not remove the reporting obligation. Your former employer will include the RFBA in the information they lodge, and you will see it on your income statement for that income year.
Does everyone with salary packaging receive an RFBA
Only employees whose taxable value of reportable benefits exceeds two thousand dollars will have an RFBA. Small mobile phone and laptop packaging arrangements that primarily support work are often exempt and may not trigger reporting.
Can RFBA affect my Centrelink payments
Yes. Centrelink uses adjusted taxable income to calculate eligibility and payment rates. RFBA forms part of that measure, so a significant figure can reduce benefits such as Family Tax Benefit or the childcare subsidy.
Can I remove RFBA by repaying the benefit later
If you make an after-tax employee contribution before the end of the FBT year, you can reduce the taxable value and therefore reduce the RFBA. Contributions after the end of the FBT year will not change the figure already reported for that period.
Are meal entertainment and car parking always excluded
Some meal entertainment benefits are excluded from RFBA, even though they may still attract fringe benefits tax. Employer-provided car parking is also generally not reportable. However, the underlying FBT rules are complex, and employers should seek specialist advice to confirm.
Key takeaways for employees
The Reportable Fringe Benefits Amount is not another tax on salary. It is simply a transparency measure that informs government agencies, lenders, and other bodies about non-cash benefits above a modest threshold. While it does not change the income tax you owe, the figure can influence Medicare levy surcharge liability, HELP debt repayments, eligibility for family benefits, and several other means-tested calculations.
Every employee who receives fringe benefits should check the RFBA figure on the annual income statement. If something looks incorrect, contact payroll and request a calculation breakdown. Keep packaging reports and related paperwork where possible. When planning new salary packaging, weigh the convenience and headline savings against the possible reduction in government benefits caused by a higher RFBA. Professional advice can help tailor a mix of cash salary and benefits that suits your financial goals while staying inside the rules set by the Australian Taxation Office.
By understanding the purpose and mechanics of the Reportable Fringe Benefits Amount, employees can approach salary packaging with confidence, avoid unpleasant surprises at tax time, and make informed choices about their total remuneration.
