I refer to Memorandum No. 89-18 issued on 21 April, 1989 which made reference to advice from the Australian Taxation Office that fringe benefits tax was not applicable to payment of the Higher Education Contribution Scheme (HECS) charges or for course fees paid by an employer provided that the course is work related.

I am now informed by the Commissioner of Taxation that employers (such as the State Government) exempt from paying income tax are liable to pay fringe benefits tax on HECS payments they make on behalf of their employees.

The taxable value of the fringe benefit is the full HECS amount paid or reimbursed by the employer. For the fringe benefits tax year ended 31 March 1989, and the fringe benefits tax year ending 31 March 1990, the amount of tax payable in respect of an employee is 49% of the HECS payment or reimbursement made by the employer.

In view of the circumstances the Taxation Office has advised that New South Wales State Government employers will be able to defer until 30 April 1990, their payments of fringe benefits tax applicable to HECS payments, for both the fringe benefits tax year ended 31 March 1989 and the car ending 31 March 1990, without penalty. Payments should be accompanied by advice giving details of the amounts applicable to each of the two years.

It would be appreciated if you would ensure that this Memorandum is brought to the special attention of all Departments and Authorities which come within or are associated with your administration.