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Introduction
Karen:
Welcome to HR2Go by Effective Workplace Solutions.
In this episode, we’ll be exploring employee benefits and the costs that are often overlooked — particularly the tax implications that can arise.
And here to unpack this topic with me is Matt Hardy from MRTG Taxes.
Matt was formerly the GE Wind International Tax Director, and since starting MRTG Taxes, his focus has been bringing discipline and structure from the large corporate space into the SME market that really needs it.
Matt, thanks so much for joining me today. Did you want to briefly tell us what you learned from your in-house tax director experience?
Learning from In-House Tax Leadership
Matt:
I can do that, Karen. Thanks very much for having me — I love the show.
A quick bit about me — I set up MRTG Taxes around 12 months ago. Prior to that, as GE Wind International Tax Director, I managed a team across a number of different countries.
What I found was that managing tax risk always came down to a few key relationships internally.
One was finance — you always want to keep your CFO on side.
The second was the business or commercial teams — the people actually driving projects and decisions.
And the third was HR.
Because in HR, you’ve got all the people-related issues that come up, and from a tax standpoint, I was often the end user of data and decisions made by those teams.
So it was really important for me to communicate back to the business the tax cost of the decisions they were making — ideally at the time they were being made — and to have input if there was a better way to structure things.
HR was definitely one of the functions I wanted to have on speed dial.
Setting the Context: Practical Advice, Not Technical Overload
Karen:
And I suppose as an HR practitioner, it’s really refreshing to hear that — because we do need support in that space.
Often we’re just told “this is a remuneration structure” or “this is salary packaging”, and there isn’t always a lot of consideration given to the implications.
Before we dive in — do you want to put a quick caveat on the discussion today?
Matt:
Yes — I should do that.
What we’re going to talk about today is general information — practical insights and commentary. It’s not specific tax advice.
If anything resonates, people should go and validate it with their internal advisors or external accountant.
What we’re really trying to do is focus on governance, risk management, and practical ways of approaching these issues.
Why Employee Benefits Are Valuable — and Where Risk Creeps In
Karen:
If we think about employee benefits, we know they’re a really powerful tool for employers.
They can improve satisfaction, support retention, and help businesses stand out in a competitive market.
When employees feel valued and supported, that flows through to engagement, loyalty and culture.
But the challenge is that benefits aren’t always as straightforward as they seem — and there can be costs that catch people off guard.
Matt, one of the most common areas would be FBT, wouldn’t it?
What is FBT and Why It Exists
Matt:
It would — and I think the fact that we talk about it as a “hidden cost” is actually part of the issue.
Because it’s not really hidden.
What we should be doing is making sure businesses understand the cost upfront, so they can make a considered decision.
FBT — Fringe Benefits Tax — is a tax paid by employers on benefits provided to employees that aren’t paid through payroll.
Anything you provide outside of salary — with a few exceptions — can fall into that category.
The purpose of FBT is to neutralise any tax advantage.
If you give someone a benefit worth $2,000, the system imposes a tax at the top marginal rate so that it’s equivalent to if they’d received that in salary.
It’s not really designed to raise revenue — it’s designed to discourage structuring remuneration outside payroll.
How Everyday Benefits Trigger FBT
Karen:
So if we think about that practically — things like Christmas parties, gift cards — those sorts of things would fall into this category?
Matt:
Yes — as a general rule.
Anything from:
- Christmas parties
- Gift cards
- Watches or recognition gifts
- Reimbursements
These are all potentially subject to FBT.
Now, there are exemptions — like minor benefits — but the starting point is:
If it’s not cash, assume there’s an FBT consideration.
Hybrid Work and Employee-Provided Equipment
Karen:
What about hybrid work arrangements?
Things like phones, laptops, or home office reimbursements?
Matt:
Good question.
There are exemptions for work-related items — but they need to be primarily for business use.
If you provide a phone or laptop for work purposes, that’s generally fine.
But if it’s mainly used for personal purposes and only occasionally for work, then you’re in FBT territory.
And practically speaking, you can’t monitor individual usage — so you have to rely on policies.
Why Policies Are Critical (Across HR and Tax)
Matt:
This is where policy becomes really important.
And not just for tax — for broader business risk as well.
An acceptable use policy helps:
- Set expectations
- Provide a framework for compliance
- Protect the business
What I found in-house was that if you align tax requirements with business needs, everyone benefits.
We all want the same outcome:
To provide employees with what they need — without creating unnecessary risk.
Minor Benefits and Lower-Cost Options
Karen:
Are there lower-cost benefits employers can offer that don’t trigger FBT?
Matt:
Yes — the minor benefits exemption.
If a benefit is:
- Less than $300
- Provided infrequently and irregularly
…it can be exempt.
For example:
- Gym reimbursements
- Small wellbeing benefits
- Birthday gifts
But it has to be genuinely infrequent, and you need records.
Scenario: Company Vehicles and FBT Exposure
Karen:
Let’s look at a common scenario.
A business provides a vehicle to a senior employee for work use — but over time, it’s also used for commuting and occasional personal trips.
What should the employer be thinking about?
Matt:
This is a great example — because it highlights a common misconception.
If an employee can take a vehicle home and garage it overnight, it is considered available for private use.
That alone can trigger FBT.
It doesn’t matter whether they’re using it mostly for work — the availability is what matters.
Managing Vehicle Use and Logbooks
Matt:
The only way to completely avoid FBT is to keep vehicles on-site.
Otherwise, you’re managing the cost.
A logbook helps — it allows you to determine the percentage of business vs private use.
If done properly over a 12-week period, it can reduce the FBT liability.
But again — it needs to be required, maintained and supported by policy.
Scenario: Informal Benefits and Lack of Tracking
Karen:
Another scenario we see is managers approving gift cards or small perks informally — without consistent tracking.
What risks does that create?
Matt:
This is where the minor benefits exemption gets stretched too far.
You need to ensure:
- The value is under $300
- It’s infrequent
- It’s tracked per employee
If you don’t have records, it becomes very hard to prove eligibility.
From a tax perspective, it becomes a binary decision — either everything is exempt, or none of it is.
Record Keeping and Governance
Karen:
So record keeping is critical?
Matt:
Absolutely.
If it’s not written down, it didn’t happen.
The more records you have, the easier it is to demonstrate compliance and stay within the rules.
ATO Focus and Increasing Scrutiny
Karen:
Are you seeing increased focus from the ATO in this space?
Matt:
Yes — particularly around motor vehicles.
They have strong data matching capabilities and can identify vehicles held in companies.
It’s an easy area for them to review and enforce.
There have been cases where businesses have faced significant liabilities because they didn’t manage this properly.
Structuring Benefits: Options and Trade-Offs
Karen:
So how should employers approach this?
Matt:
Understand the cost before you implement anything.
For example, with vehicles, you could:
- Provide a company car
- Offer a novated lease
- Provide a car allowance
Each has different implications.
Sometimes the simplest option — paying cash — is the most efficient.
Practical Takeaways
Matt:
- Right-size your benefits to your business capability
- Understand the full cost upfront
- Put policies in place
- Ensure HR, finance and tax are aligned
Final Reflections
Karen:
Employee benefits absolutely add value — but without the right structure, they can become a compliance and cost issue.
It’s about balancing support for your people with governance and control.
Matt, thank you for joining me.
Matt:
My pleasure — always happy to help.Listen to the Full Episode
For HR leaders, executives and business owners navigating increasing workplace complexity, this conversation provides practical insight into the cost, risk and governance considerations behind employee benefits.
If your Australian business needs support reviewing employee benefits, managing Fringe Benefits Tax (FBT) exposure, or strengthening governance and policy frameworks, contact the team at Effective Workplace Solutions.
Visit: https://test.goldcoastbranding.com.au
Disclaimer:
This content is general in nature and provides a summary only of the subject matter without the assumption of a duty of care by Effective Workplace Solutions. No person should rely on the contents as a substitute for legal or other professional advice.