contributions reimbursed for firefighters who are members of a scheme which provides for income protection and other benefits
common issue in three proceedings
Quick Take
1Where employee contributions to a discretionary trust scheme fund both deductible income protection benefits and non-deductible benefits (such as accidental dental, broken bones, death and disability cover), the otherwise deductible rule in s 24 of the Fringe Benefits Tax Assessment Act 1986 (Cth) requires apportionment of the contributions in accordance with the Ronpibon Tin methodology, by a fair and reasonable assessment of the extent to which the outlay relates to assessable income.
2The essential character of an outgoing — not the subjective purpose of the employee in incurring it — governs deductibility under s 8-1 of the Income Tax Assessment Act 1997 (Cth); the fact that an employee's primary objective was to obtain income protection does not render the entire contribution deductible where the scheme also confers entitlements to non-deductible benefits.
3An apportionment methodology based on actual Trust expenditure on income protection claims and the income protection component of insurance premiums, as a proportion of total Trust expenditure (excluding ordinary operating expenses), was held to be a fair and reasonable basis for determining the otherwise deductible percentage under s 24 of the FBT Act.
