A deduction cannot be claimed for a premium or any part of a premium paid under a policy that compensates you via a ‘capital’ lump sum for things such as physical injury, loss of a limb or death. Where a sickness and accident premium provides for both capital lump sum benefits and replacement of income benefits through regular payments, only the portion relating to the regular income benefits is deductible. If it cannot be determined which part of the premium is paid for insurance against the loss of your income, then you cannot claim any deduction for the premium.

2.  In relation to fees paid to a union, joining fees are not claimable as a deduction, however normal annual membership fees are claimable. Quite often your PAYG payment summary (formerly group certificates may show the fees paid by you. If so, this may be used as evidence to prove your claim

3.  Similarly, the cost of initially joining a professional or business association is not claimable as a deduction. However, annual subscriptions to trade, business, or professional associations are claimable as a deduction. For example, an accountant who must pay an annual membership/subscription fee to an accountants' association to be able to conduct business, can claim this subscription fee.

Note that for the full cost of the subscription to be deductible, there must be a direct connection between the derivation of your assessable income and the need to subscribe to the association,. Where this is not the case, a deduction of up to $42 per association can be claimed for the cost of membership of a trade, business or professional association (including initial joining fees), even though it is unrelated to the derivation of your assessable income. For example, if a taxpayer is retired but wishes to continue to be a member of an association, a deduction of up to $42 per association will generally be allowed.

Arrangements known as "salary sacrifice" arrangements can usually provide some tax benefits to employees, particularly when the employer has access to concessions under the Fringe Benefits tax rules. If the employer does not have access to concessions under the Fringe Benefits tax rules then the cost to the employer may not warrant the salary sacrifice arrangement proceeding.

Salary sacrifice arrangements involve the employee forgoing salary in return for payment of expenses by the employer. e.g payment of the employees credit card, mortgage, car expenses or additional superannuation contributions. The cost to the employee of the fringe benefit provided is usually less than if the employee had paid for the expense/benefit from after tax salary.

The FBT "grossing up" rules were introduced to more closely align the taxation consequences of providing salary and wages income with that of providing fringe benefits to employees. The new gross up rules commenced on 1^st April 1994, i.e at the beginning of the 1994-95 Fringe Benefits tax year.

The Fringe Benefits Tax Assessment Act 1986 was amended to calculate Fringe Benefits Tax payable by using a tax-inclusive value of the fringe benefit.

The fringe benefits taxable value is grossed up using the formula:-

Taxable value   X	__________1__________
	(1 - the current FBT rate)

So that employers did not bear the full cost of an increased tax liability under the gross up rules, the Income Tax Assessment Act was amended to allow Fringe Benefits Tax to be deductible for income tax purposes. Most employers, such as companies, who offer salary packages, will face a partial increased cost as a result of the gross up rules, due to the fact that they may only receive a tax deduction for the fringe benefits tax paid at a rate below the current FBT tax rate.

The cost to be included in the package of an employee on a benefit of is determined as follows:-

Salary packaging benefits have become somewhat restricted with the "grossing up" rules now applied to fringe benefits. In particular, there are now requirements to report the grossed up value of employee fringe benefits on group certificates or PAYG Payment summaries. These benefits can affect an employee’s tax liability in other areas. The grossed up value of fringe benefits can affect income tests for employees in relation to the Medicare Levy, Medicare Levy surcharge and the superannuation surcharge. Car benefits remain one of the more attractive fringe benefits, particularly for employees on a high marginal tax rate who travel many kilometres a year.

Certain work-related items can be effectively salary packaged as they are exempt fringe benefits under the Fringe Benefits Tax Assessment Act. Eligible exempt work related items include:

• A mobile phone or a car phone;
• An item of protective clothing that is required for the employment of the employee;
• A briefcase, calculator, Electronic diary or similar item ;
• A tool of trade;
• An item of computer software for use in the employee's employment;
• A notebook computer, a laptop computer or a similar portable computer.