Issue
Does a benefit obtained through fraudulent activity by an employee, give rise to a fringe benefit under the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
No. Providing the employer does not condone the actions of the employee, the obtaining of a benefit through fraudulent activity does not give rise to a fringe benefit.
Facts
An employee uses employer funds for the payment of their private expenses without the knowledge of the employer.
The action of the employee in obtaining these benefits is later proven to be a criminal offence by a Court of Law.
The unauthorised use of the employer's funds by the employee is not condoned by the employer.
Reasons for Decision
'Fringe Benefit' is relevantly defined at subsection 136(1) of the FBTAA as 'a benefit provided to the employee ... by the employer'. In relation to a benefit, 'provide' is relevantly defined to include something, which is 'allowed, conferred, given, granted or performed.'
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne, defines these terms in the following manner: Allow - 'permit (a practice, a person to do something, a thing to happen etc)' Confer - 'grant or bestow' Give - 'transfer the possession freely' Grant - (see Confer) Perform - 'carry into effect'
What is common to the definition of each of these terms is that a decision is consciously made by a person to do something for or to another person.
Where no decision is consciously made by a person to allow, confer, give, grant or perform something for or to another person, for the purposes of the FBTAA, a benefit is not 'provided' by an employer.
Thus, where a benefit is obtained from an employer through fraudulent activity by an employee, in the absence of a conscious decision by the employer to provide the benefit, the benefit obtained will not be a 'fringe benefit' for the purposes of subsection 136(1) of the FBTAA.
Conversely, where an employer condones an employee obtaining a benefit through fraudulent activity, the condoning of the activity will be regarded as a conscious decision by the employer to provide the benefit.
Amendment History
Date of Amendment Part Comment 1 May 2026 Reasons for Decision Minor grammatical amendments 1 May 2026 Business line Updated to correct business line 1 May 2026 Date reviewed Updated review date
Date of Amendment | Part | Comment
1 May 2026 | Reasons for Decision | Minor grammatical amendments
1 May 2026 | Business line | Updated to correct business line
1 May 2026 | Date reviewed | Updated review date