Residual fringe benefit: funeral expenses of deceased employee

Where an employer has organised and paid for the funeral expenses of a deceased employee, has a 'residual fringe benefit' been provided as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

No. A benefit provided in respect of a deceased employee does not give rise to a 'residual fringe benefit' as defined in subsection 136(1) of the FBTAA.

An employee died leaving a dependant spouse with a young family.

To assist the deceased's family, the employer decided to organise and pay for the funeral expenses of the deceased employee.

By making this payment, a 'residual benefit' has been provided under section 45 of the FBTAA.

Under subsection 136(1) of the FBTAA, a 'residual fringe benefit' is defined as being a 'fringe benefit that is a residual benefit'.

With regard to the definition of 'fringe benefit' at subsection 136(1) of the FBTAA, a benefit may be provided to an employee or an associate of an employee. An 'employee', through the definitions of both a 'current employee' and a 'former employee', is defined in terms of 'a person' who receives, or has received, or is entitled or has been entitled to receive, salary or wages.

Central to these concepts of an 'employee' is the continuing existence of an individual. Where the individual dies, they are no longer 'a person' for the purposes of the FBTAA. This would be distinct from a benefit being provided to a former employee who has merely retired or changed employers.

Taxation Ruling TR 1999/10A addendum states that 'The fringe benefits tax system does not apply to benefits provided to relatives of deceased employees.' Such a decision is consistent with the long-held views of the Commissioner and expressed by the then Treasurer, recorded as follows in the Historic House Hansard Database of 27 May 1987 at page 3458 question No 4745: Fringe Benefits Tax (Question No. 4745) Mr Hodgman asked the Treasurer, upon notice, on 9 October 1986: (1) Do the provisions of the fringe benefits tax legislation require an employer to pay tax on (a) employer contributions to the cost of funerals of employees, including employees killed on the job (b) employer payments for incidental funeral expenses, including hire of hearse and mourning cars, insertion of death notices on behalf of management and staff and the provision of wreaths and (c) employer provision of "free funerals" to employees of undertakers and funeral directors. (2) Will payments under State Workers' compensation legislation for funerals of deceased employees attract fringe benefits taxes. (3) Is it a fact that the fringe benefits tax will apply to certain employer expenses incurred in respect of deceased employees. Mr Keating -The answer to the honourable member's question is as follows: (1), (2) and (3) No. The fringe benefits tax legislation has no application to benefits provided in respect of a deceased employee.

These responses are consistent with the views of the Commissioner that FBT does not apply to benefits provided in respect of a deceased employee, thus the provision of a funeral for a deceased employee will not give rise to a fringe benefit.

Date of Amendment Part Comment 1 May 2026 Business Line Updated to reflect change of ownership 6 August 2018 Reasons for Decision Minor amendment to fourth paragraph to remove duplication. 6 August 2018 Keywords Updated. 6 August 2018 All Other minor grammatical amendments.

Date of Amendment | Part | Comment

1 May 2026 | Business Line | Updated to reflect change of ownership

6 August 2018 | Reasons for Decision | Minor amendment to fourth paragraph to remove duplication.

6 August 2018 | Keywords | Updated.

6 August 2018 | All | Other minor grammatical amendments.