FBT Article ‘ reimbursement/payment of staff ‘working with children check’ costs

The ‘working with children check’ (check) assists in protecting children from sexual or physical harm by ensuring that people who work with, or care for, them are subject to a screening process.

Unless an exemption applies, an individual must obtain a check to do child-related work. An individual is generally regarded as doing child-related work if they work within certain occupational fields and their contact with children is direct and part of their duties.

We are aware of TaxEd members that employ staff required to undertake the check. In many of these instances the cost of the check is reimbursed/paid by the employer.

The core issue here is whether the cost of the check is subject to FBT. We are not aware of any specific exemption for such costs. As such, unless the cost of the check is considered ‘otherwise deductible’ or is capable of exemption as a minor benefit (i.e. taxable value of < $300), the employer will have an FBT liability exposure.

Is the cost ‘otherwise deductible’?

Based on ATO Private Binding Ruling 1012693348413 and ATO Class Ruling 2001/38, it appears such costs will be considered ‘otherwise deductible’ in the following situations:

•      where the employee is an existing employee and is required to obtain the check in order to continue to derive assessable income in that position;
•      where a new employee has recently derived assessable income from being continuously employed within the field of child-related employment; or
•      where a renewal is required, the cost of the renewal is deductible to the employee where the employee is currently employed in a permanent, temporary or casual position and requires the renewed check to continue in that employment.

The cost of obtaining the initial check for a new employee who has not recently been continuously employed in the field of child-related employment is not deductible as it is considered to have been incurred ‘too soon’.

Unfortunately, CR 2001/38 and private binding ruling 1012693348413 do not address access to the minor benefit exemption as these two documents only look at deductibility under the income tax law.

Where the cost of the check would not be considered ‘otherwise deductible’, then perhaps the fall back argument would be the application of the minor benefit exemption in section 58P of the FBT Act if the cost is less than $300.

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.