Can you be taxed on frequent flyer points?

Escape’s points expert, Sabine Leroy, answers your questions about frequent flyer programs.

Frequent flyer points can be confusing around tax time.

Hey ATO, keep your hands off my frequent flyer points.

Do I need to pay tax on my Frequent Flyer points?

Frequent flyer points are not taxable. When you redeem your points for flights, the points’ portion is still paid without money so it wouldn't be considered a cost you incurred. You’ve exchanged points for a flight, or an upgrade. What is taxable is the portion you pay for in cash. 

Let’s say you use your Qantas Frequent Flyer points for a flight from Brisbane to Honolulu. As with most redemption fares, you still need to pay for any taxes on top. This cost you can claim on your expenses should the flight be for work. 

Depending on your circumstance, it can make more sense to use your miles for personal trips. That way, if you book flights for work purposes, you can add the full cost of the fare to your taxes.

Frequent flyer points are not taxable.

What about the points I earn on business trips?

Some employees will fly for work and share their frequent flyer number with their company. This allows employees to earn points on their personal account without having to pay for the fare. Down the track, employees will then be able to redeem the points for personal use. 

According to the Australian Taxation Office, flight rewards received by employees from employer-paid expenditure are not assessable income.

For other frequent flyer points and flight queries, the ATO has a whole ruling on flight rewards received under a consumer loyalty program. 

Have a question about points? Drop Sabine an email at [e-mail]. Personal replies are unfortunately not possible.

Originally published as Can you be taxed on frequent flyer points?