Preamble
No. The award will only be a fringe benefit where an employer actively or passively participates in or has knowledge of product promotions or where it is an industry norm that benefits are provided by a third party.
Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 defines 'arrangement' to give it an extended meaning, in common with provisions of other taxation laws, so as to include any agreement, arrangement or understanding, either expressed or implied, and whether or not intended to be enforceable under law. It is considered that where an employee is offered and accepts an award, and the employer takes no action to prohibit acceptance, there is an arrangement in place.
An employer would not be liable for fringe benefits tax where employees are precluded from participating in product promotions arranged by third parties. Evidence that an employer does not allow an employee to participate in such promotions would include: manuals detailing company policy personnel information provided to all staff instructions issued to staff prohibiting acceptance of awards and advising of disciplinary action if policy is not adhered to correspondence to customary providers of incentives advising of the employer's policy and requesting that its employees be excluded from product promotions signed undertakings by staff not to accept awards.
Where that evidence does not exist, it is considered that the employer is acquiescing in the provision of the benefit, and therefore the benefit is provided under an arrangement.
Where an effective policy is in place, and despite that policy, an employee accepts an award from a third party provider, the award will be assessable income to the employee under subsection 25(1) and/or paragraph 26(e) of the Income Tax Assessment Act 1936.