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  • Calculating fringe benefits tax

    We do not usually notify employers of how much FBT you have to pay. You must self-assess your own FBT liability each FBT year (which runs from 1 April to 31 March).

    The FBT rate may vary from year to year.

    You may find the following steps useful in working out how much FBT you have to pay:

    Step

    Instruction

    Step 1:

    Determine what type of fringe benefits you provide.

    Step 2:

    Work out the taxable value of each fringe benefit you provide to each employee. The rules for calculating the taxable value of a fringe benefit vary according to the type of benefit.

    Step 3:

    Work out the total taxable value of all the fringe benefits you provide for which you can claim a GST credit.

    Step 4:

    Work out the total taxable value of all those benefits for which you cannot claim a GST credit, for example, supplies you made that were either GST free or input taxed.

    Step 5:

    Work out the grossed-up taxable value of the benefits by multiplying the total taxable value of all the fringe benefits you can claim a GST credit for (from step 3) by the type 1 (higher) gross-up rate.

     

    'Grossing-up' means increasing the taxable value of benefits you provide to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax.

    Step 6:

    Work out the grossed-up taxable amount by multiplying the total taxable value of all the fringe benefits you cannot claim a GST credit for (from step 4) by the type 2 (lower) gross-up rate.

    Step 7:

    Add the grossed-up amounts from steps 5 and 6. This is your total fringe benefits taxable amount.

    Step 8:

    Multiply the total fringe benefits taxable amount (from step 7) by the FBT rate to get the total FBT amount you are liable to pay.

    See also:

      Last modified: 22 Jun 2017QC 16948