Australian FBT Relocation Allowance 2026: Section 20-25 ITAA Guide
Australian employers can pay or reimburse certain qualifying relocation expenses to employees without triggering Fringe Benefits Tax (FBT) under FBTAA 1986 Sections 58A-58E and ITAA 1997 Section 20-25. Eligible exempt categories include: removal/transport of household goods, sale of old home costs (real estate commission, legal fees, stamp duty), temporary accommodation up to 6 months, transport of family pets, and connection of utilities. The exemption is unlimited in dollar amount when categories qualify — unlike the UK's £8,000 cap. Non-qualifying spend is reportable as a Fringe Benefit at the FBT rate (47% in 2026/27).
Tax-Free Relocation = Qualifying Categories (unlimited $) — Reported on Employee's Reportable Fringe Benefits Statement only if exceeded
Australia's relocation tax framework is significantly more generous than most other OECD countries. Under FBTAA 1986 sections 58A-58E and ITAA 1997 Section 20-25, employer-paid relocation expenses across multiple categories are entirely FBT-exempt — with no dollar cap. This means a $50,000+ executive relocation package can be fully tax-free if all spend falls within qualifying categories. This 2026 guide walks every eligible category, ATO ruling references, and the practical implications for both employees and employers.
What This Means
The calculator compares qualifying vs non-qualifying spend in your relocation package. Qualifying spend has zero FBT impact. Non-qualifying spend is grossed-up and FBT applies at 47%. Maximize the qualifying categories before considering cash supplements.
FBT Overview: Why Categories Matter
Fringe Benefits Tax (FBT) is paid by Australian employers (not employees) at a flat 47% rate on the grossed-up value of fringe benefits provided to employees. The FBT year runs April 1 – March 31. Without an exemption, every dollar of employer-paid benefit costs the employer roughly $1.94 (gross-up factor 2.0802 × 47% = 0.977 + the original $1).
The relocation exemptions in FBTAA Sections 58A-58E zero-out FBT for qualifying expense categories — making employer-paid relocation effectively cost-neutral vs cash compensation that would face employee marginal tax + employer payroll tax + FBT.
FBT-Exempt Relocation Categories (FBTAA 58A-58E)
- Section 58A — Living-away-from-home accommodation. Up to 12 months of accommodation expenses for an employee maintained at a temporary work location away from their usual residence. Includes rent, lodging, food up to reasonable amount.
- Section 58B — Removal and storage of household effects. Cost of moving an employee's household goods to or from a new work location. Includes professional removalist invoice, packing materials, container shipping, in-transit storage. Unlimited dollar amount.
- Section 58C — Sale of dwelling associated with relocation. Reimbursement of costs incurred selling old home: real estate commission, legal fees, conveyancing, stamp duty (sale-side), advertising. Unlimited dollar amount.
- Section 58D — Connection or re-connection of utilities (telephone, electricity, gas). Reasonable hookup fees at new location.
- Section 58E — Acquisition of a dwelling associated with relocation. Reimbursement of legal/conveyancing fees on purchase of new home. Note: stamp duty on PURCHASE is generally NOT exempt under 58E (must be 58F).
- Section 58F — Reimbursement of legal expenses, stamp duty, and reasonable incidental costs of acquiring a new dwelling within 4 years of moving. This covers stamp duty on the purchase of new home — this is the exemption that captures the major cost.
- Section 58G — Removal of family pets. Reasonable cost of pet relocation.
- Section 58H — Reimbursement of leave loading or excess loading. Costs incurred during compulsory leave for relocation.
ITAA Section 20-25: The 'Genuine Restraint' Test
To qualify for the FBT exemptions, the employer-paid expense must meet ITAA 1997 Section 20-25 — the relocation must be a "genuine relocation" required by the employer for business reasons. Key tests:
- Relocation is required by the employer (or substantially driven by employer needs).
- The new home is reasonably close to the new workplace.
- The employee genuinely relocates (not just temporary travel).
- The relocation reduces commuting distance or requires the employee to live at the new location.
ATO scrutiny tends to focus on whether the relocation is genuine — voluntary moves with no business driver are likelier to be challenged.
Non-Qualifying Spend (Subject to Full FBT)
- Cash relocation "signing bonus" or general relocation allowance not tied to specific qualifying expenses.
- Spousal job-search support.
- Children's school fees (always FBT-able).
- Tax preparation services.
- Long-term housing allowance (after 12 months).
- Accommodation expenses NOT meeting living-away-from-home conditions (employee maintains both old and new residences for personal preference).
- Benefits paid more than 4 years after relocation (Section 58F caps eligible reimbursement at 4 years).
Worked Examples: AU Corporate Relocation
Example 1: Mid-level professional, Brisbane to Sydney
- AFRA-accredited removalist (Allied Pickfords AU): A$5,400
- Real estate commission on Brisbane sale (2.5% × $750K): A$18,750
- Legal fees Brisbane sale: A$1,800
- Legal fees Sydney purchase: A$2,200
- Sydney stamp duty (on $1.2M home): A$54,490
- Connection charges new utilities: A$300
- Pet relocation: A$650
- Temporary accommodation 4 weeks: A$5,200
- Total qualifying (Sections 58B, 58C, 58D, 58E, 58F, 58G, 58A): A$88,790
- FBT impact: A$0 (all categories qualify)
Compare to cash payment of A$88,790 to the employee:
- Employer payroll tax: ~A$5,000-6,000
- Employee marginal income tax (47%): A$41,731
- Net to employee after tax: A$47,059
- To deliver same A$88,790 net: employer would need to pay ~A$167,500 cash
Direct payment of qualifying expenses saves both employer and employee approximately A$80,000 vs equivalent cash compensation.
Example 2: Executive relocation from London to Sydney
- International air freight: A$28,000
- Legal fees Australian purchase: A$3,500
- Sydney stamp duty $1.8M home: A$78,000
- Temporary accommodation 6 weeks: A$8,400
- Pet relocation (UK to AU): A$3,200
- Total qualifying: A$121,100. FBT impact: A$0 if all categories qualify.
Employer Best Practice 2026
- Use a relocation management company (RMC). Major AU RMCs: ECA International, Cartus, Crown World Mobility, Santa Fe Relocation. RMC fee A$2,000-A$5,000 saves multiples in correct categorization.
- Direct supplier billing. Pay AFRA removalist, conveyancer, real estate agent directly rather than reimbursing employee. Direct payment is cleaner for FBT documentation.
- Clear written relocation policy. Define qualifying vs non-qualifying expense reimbursement. Distribute to employees before move.
- Tax equalisation for international assignees. If moving employees inbound (e.g., UK to AU), use tax equalisation policy to ensure tax neutrality across jurisdictions.
- Maintain detailed records. ATO can audit any FBT-exempt classification. Keep removalist invoices, real estate commission documents, legal fees, accommodation receipts.
- Avoid cash supplements. Any cash component is fully FBT-able. Provide reimbursement of itemized expenses instead.
Employee Strategies
- Push for direct supplier payment — has the employer pay the AFRA removalist, conveyancer, and lender directly rather than reimbursing you.
- Provide detailed receipts. Categorize spend correctly (removal, sale costs, accommodation) so the FBT-exempt classification holds up to ATO review.
- Use the 12-month accommodation window. Section 58A allows up to 12 months of temporary accommodation. Don't rush to permanent housing if your employer is paying.
- Use the 4-year reimbursement window. Section 58F covers stamp duty/legal on new home purchase up to 4 years after relocation. If you delay buying for tax-planning reasons, the exemption persists.
- Negotiate gross-up for any non-qualifying portion. If employer is providing FBT-able benefits, request gross-up so net value is maintained.
- Document the genuine business reason. Keep record of orders/transfer letter, new role description, and old-vs-new commute distance to support the Section 20-25 "genuine relocation" test.
Expert Notes for This Route
Australia has one of the most tax-efficient corporate relocation regimes in the OECD. Compared to the UK (£8K cap), USA (post-TCJA mostly taxable for civilians), and Canada (limited to qualifying expenses with income-limit), Australia's FBT exemptions are uncapped and broadly defined. For high-cost relocations involving Sydney/Melbourne stamp duty, the Section 58F exemption alone saves $40K-$80K in employer FBT cost. The single most-overlooked employee benefit is the 12-month Living-Away-From-Home Allowance (Section 58A) — many employees move to permanent housing immediately and miss the year of FBT-free temporary accommodation.
Last reviewed 2026-05-07 by Mustafa Bilgic.
Data Sources & Citations
Frequently Asked Questions
Is there a dollar cap on Australian FBT relocation exemption?
No — unlike the UK's £8,000 cap, Australia's FBT exemptions under FBTAA Sections 58A-58H have no dollar cap when expenses fall within qualifying categories. A $100,000+ qualifying relocation package can be entirely FBT-free.
Is stamp duty on the new home covered?
Yes, under FBTAA Section 58F. Reimbursement of stamp duty on the purchase of a new dwelling within 4 years of relocation is FBT-exempt. This is the most valuable exemption for relocators buying in metro Sydney/Melbourne where stamp duty exceeds A$50K-A$80K.
Can my employer pay for temporary accommodation?
Yes, up to 12 months under FBTAA Section 58A (Living-Away-From-Home Allowance). Includes rent, food up to reasonable amount, and utilities at the temporary location. After 12 months, accommodation becomes FBT-able.
Are real estate commissions covered?
Yes for the SALE of your old home (FBTAA Section 58C). Commission is FBT-exempt with no dollar cap. Note: real estate commission on PURCHASING new home is NOT separately covered (typically buyer doesn't pay commission in Australia anyway — seller pays).
Are pet relocation costs covered?
Yes under Section 58G. Reasonable cost of relocating family pets is FBT-exempt. Includes pet relocation services (e.g., Jetpets, Dogtainers), travel crates, and quarantine fees if applicable.
What about cash relocation allowance from employer?
Cash allowances not tied to specific qualifying expenses are FBT-able at 47% gross-up — costs the employer roughly A$1.94 per A$1 of cash benefit. Avoid cash; use itemized reimbursement of qualifying expenses for tax efficiency.
Does Australia have an equivalent of the UK £8,000 corporate relocation cap?
No. Australia's FBT relocation exemptions have no dollar cap when expenses qualify. This makes employer-paid relocation in Australia significantly more tax-efficient than in the UK or USA.