Question
We have an employee completing an undergraduate degree that is a Commonwealth supported place.
The study is being undertaken at our recommendation as it will assist to meet a specific business need that we would need to source externally otherwise.
We will reimburse the employee’s course fee and associated costs. The employee is hesitant to do the study if it will financially negatively impact her.
Can you please advise the FBT implications.
Answer
The course would appear to be related to the employees income earning role and therefore has sufficient nexus to be considered ‘otherwise deductible’. As such, costs associated with the study would be ‘otherwise deductible’ and not subject to FBT.
However, if it is a Commonwealth supported place, and there is a ‘student contribution’ amount payable, this contribution amount is specifically denied as a tax deduction under the income tax provisions.
On this basis, if you were to pay or reimburse this component of the course fee, FBT would be payable.
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