• Paying FBT

    If your not-for-profit organisation provides a fringe benefit to its employees or to associates of its employees, it may have a FBT liability. Your organisation's liability can be reduced by FBT concessions if it is entitled to them.

    Employers must assess their FBT liability annually. To calculate your FBT liability, gross up the taxable value of fringe benefits you provided.

    Grossing up means increasing the taxable value of a benefit to reflect the gross salary an employee would have to earn at the highest marginal tax rate, including the Medicare levy, to purchase the benefit using after-tax dollars.

    There are two separate gross-up rates:

    • a higher (type 1) gross-up rate – used where the benefit provider is entitled to a GST credit for the provision of a benefit
    • a lower (type 2) gross-up rate – used if the benefit provider is not entitled to GST credits.

    Always use the lower (type 2) gross-up rate for reporting on employees' payment summaries.

    The tax payable is the fringe benefits taxable amount multiplied by the rate of tax.

    Next steps:

    See also:

    Last modified: 02 Nov 2016QC 46329