When does RFBA appear?
Your employer must report fringe benefits to the ATO if the grossed-up taxable value of benefits in an FBT year (1 April to 31 March) is more than $2,000. For most packaged expenses the grossed-up value is 1.8868 times the cash amount you gave up, so the figure on your statement is much higher than the amount you actually sacrificed.
What it does not affect
RFBA is not added to your taxable income, so it does not push you into a higher tax bracket and you pay no additional income tax on it.
What it does affect
RFBA is included in several income tests, so it can change what you pay or receive:
- HELP and other study loan repayments
- The Medicare levy surcharge if you do not hold private hospital cover
- Family Tax Benefit and some other family payments
- Child support assessments
- The Division 293 super tax threshold
Example
A nurse who packages $9,009 in cash has a grossed-up value of about $17,000, so $17,000 appears as RFBA. If they have a HELP debt, their repayment income includes that $17,000, which can raise their compulsory repayment rate.
How to plan around it
If you have a study loan or receive income-tested payments, work out the effect before packaging the full cap. Our calculator shows your estimated RFBA so you can compare it with income-test thresholds.