A ‘fringe benefit’ is a payment to an employee by their employer, in respect of
their employment, that occurs in a different form to cash salary or wages. Fringe
Benefits Tax (FBT) is the taxation paid on these employer-provided benefits; however
not all fringe benefits are subject to FBT.
The full rate of FBT is 47% of the grossed-up value of salary packaged benefits.
However, the actual amount of FBT payable will depend on the type of benefit packaged,
as some benefits are treated concessionally for FBT purposes.
A benefit will be FBT free where it is either specifically exempt under the FBT
legislation, or it satisfies the ‘otherwise deductible rule’ where you would have
been entitled to claim an Income Tax deduction for the expense had it been paid
for using your post-tax income.
Click here to see a comprehensive list of
FBT exempt benefits based on your Employer Type.
The FBT year is 1st April - 31st March. Any Fringe Benefits Tax and Reportable Fringe
Benefits Amount (RFBA) incurred during this period will be reported on your Payment
Summary at the end of the Income Tax year. The Income Tax year is 1st July – 30th
June; therefore RFBA recorded will be from the FBT year ending 3 months earlier
(31st March).
All employers fall into one of four different FBT statuses. Rebatable, Charity and
Public Health employees are eligible for FBT tax concessions, which allow for a
reduction in FBT payable or an FBT exemption. These concessions are limited to a
‘Cap’ and determine the amount of FBT payable (if any).
FBT Concession Caps based on Employer Type:
|
Private Sector
|
Full rate of FBT (47%)
|
No concession
|
|
Government
|
Full rate of FBT (47%)
|
No concession
|
|
Rebatable
|
53% of full rate of FBT (effectively a rate of 24.91%)
|
$30,000 Grossed-Up (up to $15,900 actual dollars)
|
|
Charity
|
Exempt
|
$30,000 Grossed-Up (up to $15,900 actual dollars)
|
|
Public Health
|
Exempt
|
$17,000 Grossed-Up (up to $9,010 actual dollars)
|
The process of grossing-up is used to determine the amount of FBT Concession Cap
usage or FBT applicable to a fringe benefit. The grossed-up value of a particular
fringe benefit will depend on the specific type of benefit being packaged. Some
benefits (FBT-free benefits) do not have a taxable value (or grossed-up value) and
do not incur a FBT liability.
Grossed-Up Taxable Value = Taxable Value of Benefit x Gross-Up Factor
|
Type 1
|
YES
|
2.0802
|
|
Type 2
|
NO
|
1.8868
|