FF points, fringe benefits and the ATO

[Jim]

Are FF points subject to fringe benefits tax?

 

[albatross710]

The issue of Frequent Flyer points has been addressed by the tax office and I don't believe they are assessed as fring benefits. I found this article, albeit from 1996. There are others.

Tax office accepts decision on frequent flyers

The Commissioner of Taxation, Mr Carmody, today advised that he will not be lodging an appeal against the recent decision of the Federal Court in the frequent flyer awards case.



This case considered whether employees who redeemed points under frequent flyer arrangements and received 'free' airline tickets would have the value of the 'free' ticket included in their assessable income. The points had accrued as a result of travel undertaken by the employee for the employer and paid for by the employer.

• "The Federal Court ruled that the way the particular frequent flyer arrangements operated, there was no benefit provided directly by the employer to the employee, Mr Carmody said.
  "We are currently preparing a Tax Ruling which will set out the Office's revised views as a consequence of this decision".

The Court held that the 'free' tickets were not income assessable to the employee. The Commissioner accepts the decision and will apply it to similar frequent flyer arrangements.
​

 

[albatross710]

On a related topic I've heard that defence force personnel who travel in their own time on a military transport have that assessed as a fringe benefit. ie if you are at Amberley on leave and you want to get to Melbourne and there is space available on a Hercules you used to be able to travel for free as the aircraft was going there anyway. Travel is still free but the equivalent cost of a civilian flight is added to the group certificate.

Anyon know if this is still happening?

 

[NM]

As they are not directly provided by your employer, they could not be considered taxable under Fringe Benefits Tax (which is payable by the employer and not by the employee). However, under some circumstances there could be personal income tax liability.

You should discuss the matter with your tax accountant or if you process your own tax affairs then search the ATO web site for key words such as "Frequent Flyer".

See Good points for frequent flyers, employers

This ATO link details where loyalty program points may be deemed to have tax liability.