Highlights

  • Salary-packaged work travel faces new FBT restrictions from April 2027.
  • Genuine employer reimbursements outside packaging may retain relief.
  • Employees cannot personally deduct costs their employer reimburses.
  • Payroll teams should separate reimbursement and remuneration policies.

An airfare to a professional conference can be a legitimate cost of doing a job. Yet the way that airfare is funded may soon matter as much as its business purpose. A salary sacrifice arrangement and an ordinary reimbursement can produce different fringe benefits tax outcomes, even when the employee attends exactly the same event.

The Rule Behind the Change

Under the otherwise deductible rule, an employer may reduce the taxable value of certain expense-payment fringe benefits by an amount the employee could have deducted if personally responsible for the cost. This has often made genuine employment expenses, such as eligible training and travel, effectively free of FBT. From the FBT year starting 1 April 2027, a restriction applies to covered work-related expenses provided through salary packaging. Where the statutory conditions are met, that reduction is unavailable.

The Same Conference, Two Paths

Imagine an employee attending a work conference with a $300 return flight, $150 in eligible local transport and a $250 registration fee. If the $700 is reimbursed under a salary packaging arrangement after the change, the employer cannot simply rely on the otherwise deductible rule to eliminate FBT. If the employer reimburses the same qualifying expenses as an ordinary business expense outside salary packaging, the rule may still reduce the taxable value, provided its documentation requirements are met. The commercial and tax results can be very different.

Why the Standard Deduction Matters

The reform accompanies the new standard work-expense deduction of up to $1,000 for eligible employees from 2026–27. That deduction is designed to simplify claims for workers with modest expenses. Employees cannot also claim an expense they have been reimbursed for. However, a qualifying employer reimbursement does not itself use up the employee's standard deduction. This is why the line between a remuneration trade-off and a normal business reimbursement matters.

An Expense Policy Needs More Than a Label

A salary packaging arrangement can include an agreed reduction in pay or a remuneration structure in which cash salary would otherwise have been higher. Merely calling a payment a reimbursement does not establish its tax treatment. Employers should review contracts, approval workflows, evidence of business purpose and payroll codes. Workers should check whether conference costs will be paid directly, reimbursed or deducted from salary before committing to non-refundable bookings.

Risks to Watch

Not every trip is deductible: private travel, holidays added to a conference and ordinary commuting require separate treatment. Documentation and apportionment remain important even when an employer pays. Draft guidance can change in detail, so payroll teams should monitor final interpretations ahead of April 2027 rather than assuming that every work-related expense receives identical treatment.

A Practical Detail Worth Checking

For workers travelling regularly, consistency matters. A single expense might be treated differently if it sits inside a salary package rather than the employer's normal expense policy. Clear approvals before travel can prevent disputes over who bears the bill, particularly when itineraries include private activities.

General information only. This article is not personal taxation or financial advice.