Fringe benefits tax (FBT) is paid on certain benefits employers provide to their employees in place of wages. All fringe benefits with taxable value under the Fringe Benefits Tax Assessment Act 1986, except tax-exempt body entertainment fringe benefits,are liable for payroll tax.
If the benefit is exempt, except for deposits to the Superannuation Holding Accounts Special Account, or has a nil value it is not liable for payroll tax.
For more information on values and exempt benefits, view the Fringe Benefits Tax Assessment Act 1986.
How do I calculate the fringe benefit value for payroll tax?
The value of the benefits used for payroll tax is the total of the Type 1 and Type 2 aggregate amounts multiplied by the Type 2 gross up rate.
The table below provides the relevant gross up rate for the following financial years.
Note: Although the FBT year is from April to March, for payroll tax purposes we allow employers to assume the rates apply from July to June in line with the financial year.
|Period||Gross up rate|
|01/07/2015 - onwards||1.9608|
|01/07/2014 - 30/06/2015||1.8868|
|01/07/2010 - 30/06/2014||1.8692|
Note: the 'reportable value' shown on the taxation statements of employees should not be used.
How do I declare the fringe benefits in my payroll tax assessment?
You are required to declare the actual value of total fringe benefits for each month. However, you can elect to use the monthly estimate method if you have 15 months or more of fringe benefit payments. Otherwise, you must provide actual fringe benefit amounts.You can do this monthly by adding all Type 1 and Type 2 benefits then multiplying the aggregate by the relevant Type 2 gross up rate for the specific year.
Monthly estimate method
For July to May, you must use 1/12 of the taxable value from your FBT return for the year ending 31 March immediately preceding the current financial year. The below example uses the gross up rate for the 2016-17 financial year.
A business' 31 March FBT return has:
|Type 1 aggregate amount =||$80,000|
|Type 2 aggregate amount =||$150,000|
|Taxable value =||($80,000 + 150,000) x 1.9608|
|Monthly returns =||$450,984/12|
What amount do I declare in my annual reconciliation?
The amount declared is the taxable value from your FBT return for the year ending 31 March immediately preceding the Annual Reconciliation. You can do this by adding the sum of all Type 1 benefits to the sum all Type 2 benefits then multiplying the aggregate by the Type 2 gross up rate for the specific year.
What if I pay fringe benefits in other States or Territories?
If you pay fringe benefits in New South Wales (NSW) and interstate but you cannot accurately determine your NSW fringe benefits value, you can pro-rata your FBT value for NSW based on the ratio of NSW wages to total Australian wages.
Monthly estimate method
The formula is total NSW wages (excluding fringe benefits) divided by total Australian wages (excluding fringe benefits) multiplied by the taxable value from your FBT return for the year ending 31 March immediately preceding the current financial year divided by 12.
The formula is total NSW wages (excluding fringe benefits) divided by total Australian wages (excluding fringe benefits) multiplied by the taxable value from your FBT return for the year ending 31 March immediately preceding the annual reconciliation.
What if I cease to employ?
If you cease to employ and therefore cease to be liable for payroll tax, the amount of fringe benefits you declare in your final payroll tax return will be the difference between:
the actual taxable value of the NSW fringe benefits paid for the period from the preceding 1 July to the cease date
the taxable value of the NSW fringe benefits declared each month for payroll tax during that period.
For more information, view Revenue ruling PTA 003 – Fringe Benefits.