holiday travel tax

This tax strategy only applies to overseas employees working in Australia, and Australian residents working overseas. Under the FBT legislation the taxable value of holiday travel costs (flights, accommodation and meals) provided to these employees (and their families) are reduced by 50% if they travel back to either:

  • the town where they lived before being engaged to work at that locality.
  • the Capital City of the State in which the workplace is located.

For example, this enables an employee to salary sacrifice a $10,000 holiday with their employer, but only reimburse the employer $5,000 (in after-tax dollars). The net affect is the employer has had no extra cost and has no FBT liability, whilst the employee has saved the tax payable on $5,000 (50% of the holiday costs).