Fringe benefits tax - a guide for employers

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Chapter 6 - Not-for-profit organisations and fringe benefits tax

   Relying on this Guide

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this Guide applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If your organisation provides a fringe benefit to its employees or to associates of its employees, your organisation may have an FBT liability. Remember, a fringe benefit may be provided by another person on behalf of an employer. It may also be provided to another person on behalf of an employee (for example, a relative).

Depending on your type of organisation, certain benefits you provide to employees receive concessional FBT treatment. Charities that want to access FBT concessions must be registered with the ACNC as a charity and endorsed by us.

6.1 Employees, independent contractors or volunteers

It is important to determine whether an individual is an employee, volunteer or contractor of your organisation. This status may affect the tax treatment between the individual and the organisation. You should always consider the facts and circumstances of each individual when determining whether they are an employee, volunteer or independent contractor.

Employees

For the purposes of FBT, an employee is a person who receives (or is entitled to receive) salary or wages in return for work or services provided.

If an organisation provides non-cash benefits to employees in lieu of salary or wages, FBT can apply.

Independent contractors

An independent contractor is an entity (such as an individual, partnership, trust or company) that agrees to produce a designated result for an agreed price.

For more information about determining if workers are employees or contractors, refer to How to work it out: employee or contractor

Volunteers

A volunteer is not paid for work. Reimbursing a volunteer for out-of-pocket expenses does not cause them to become an employee. Generally, benefits provided to volunteers don't attract FBT. For more information, refer to Volunteers and FBT .

6.2 FBT concessions and endorsement

The FBT concessions which specifically apply when the employer is a not-for-profit organisation are:

  • FBT exemption
  • FBT rebate
  • certain benefits provided by registered religious institutions and not-for-profit companies
  • car parking
  • remote area concessions.

For these concessions to apply to a not-for-profit entity that is a charity, the entity must be registered with the ACNC and endorsed by us.

A charity which is registered by the ACNC as a charity is a registered charity. The ACNC also registers each registered charity in a sub-type according to its charitable purposes. The relevant sub-types for FBT purposes are:

  • registered health promotion charity (charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings)
  • registered public benevolent institution (charitable institution that is a public benevolent institution)
  • registered religious institution (charitable institution that is a religious institution).

Endorsement of a registered charity is also required to access:

  • FBT exemption for public benevolent institutions
  • FBT exemption for health promotion charities
  • FBT rebate for Registered Charities

To apply for endorsement, see the Application for endorsement for charity tax concessions .

Registered charities who are applying for endorsement can indicate on their application form the type of FBT concession and the date from which it applies.

A registered charity's endorsement details are recorded on the Australian Business Register .

6.3 FBT exemption - subject to capping

Subject to certain conditions, some organisations are exempt from FBT. These organisations include:

  • registered public benevolent institutions endorsed by the ATO for FBT concessions
  • registered health promotion charities endorsed by the ATO for FBT concessions
  • public and not-for-profit hospitals
  • public ambulance services

Benefits provided by these organisations may be exempt where the total grossed-up value of certain benefits (which are benefits not otherwise exempt) provided to each employee during the FBT year is equal to, or less than, the capping threshold. If the total grossed-up value of fringe benefits provided to an employee is more than that capping threshold, your organisation will need to pay FBT on the excess.

Table 1 - capping thresholds

OrganisationCapping threshold
Registered public benevolent and health promotion charities$30,000 per employee
Public and not-for-profit hospitals and public ambulance services$17,000 per employee

The full capping threshold applies even if the employer did not employ the employee for the full FBT year. For example, if a registered public benevolent institution employed an employee between October and March and the total grossed-up value of benefits provided was $25,000, FBT will not be payable.

If an organisation is a registered public benevolent institution and a public or not-for-profit hospital, the hospital capping threshold applies. The organisation cannot be endorsed for FBT concessions as a registered public benevolent institution and cannot apply the $30,000 capping threshold.

The term 'public hospital' includes government-run hospitals and most not-for-profit privately controlled hospitals operating for the benefit of the public. Whether a hospital is a public hospital, is a question of fact taking all circumstances into account. A major factor is whether its purpose is directed toward the public, not whether it is publicly or privately controlled.

Example - not-for-profit privately owned hospital is a public hospital

A hospital is privately owned and is funded in the form of payments based on a fee for the service provided to patients. The hospital does not operate for the purpose of distributing gain or profit to its members. The Government does not control the hospital. Its main activities involve the provision of acute medical and surgical care and associated accommodation and nursing services on the premises of the hospital. Private patients are entitled to access the hospital and, while the public has no right of admission, they are entitled to the services of the hospital provided they pay the corresponding fee for the services.

The hospital, while privately owned, is a public hospital and even if the public hospital is a registered public benevolent institution, the hospital capping threshold of $17,000 applies.

The term 'not-for-profit hospital' includes not-for-profit hospitals operated by a charity.

Hospital organisations that provide certain entertainment benefits under salary packaging arrangements may be eligible for a separate exemption cap. Refer to section 6.5 for further information.

FBT exemptions are also available to registered religious institutions and not-for-profit companies. These exemptions are not subject to capping. For more information see sections 6.6 and 20.5 .

For information about:

6.4 FBT rebate

The FBT rebate is an entitlement to a rebate equal to a percentage of the gross FBT payable, subject to a capping threshold. Organisations that qualify for the FBT rebate are referred to as 'rebatable employers'. Rebatable employers are certain non-government, not-for-profit organisations. Organisations that may qualify for the FBT rebate include:

  • registered charities (other than public benevolent institutions or health promotion charities) that are an institution, not established under a government law and are endorsed by us as a tax concessions charity
  • certain scientific or public educational institutions
  • certain trade unions and employer associations located in Australia exempt from income tax
  • not-for-profit tax exempt organisations established for
    • musical purposes
    • community service purposes
  • not-for-profit tax exempt organisations established for the encouragement of
    • science
    • animal racing
    • art
    • a game or sport
    • literature
    • music
  • not-for-profit tax exempt organisations established for the purpose of promoting the development of
    • aviation or tourism
    • Australian information and communications technology resources
    • Australia's agricultural, pastoral, horticultural, viticultural, aquacultural, fishing, manufacturing or industrial resources.

Registered charities must be endorsed by us to access the FBT rebate. The FBT rebate is only available to registered charities that are institutions.

The FBT rebate is not available to:

  • registered charities that are funds
  • registered charities that are institutions established by a government law. A government law is a law of the Commonwealth, a State or a Territory. Examples are public universities, public museums and public art galleries
  • registered public benevolent institutions and registered health promotion charities - these organisations are eligible for the FBT exemption

A registered charity is an entity who is registered by the ACNC as a charity.

For more information refer to Getting endorsed .

Other not-for-profit organisations can self-assess their entitlement to the FBT rebate provided they are a rebatable employer.

The FBT rebate is an entitlement to a rebate equal to a percentage of the gross FBT payable, subject to a capping threshold as follows.

FBT rebate percentage and capping threshold

FBT year endingRebate percentageCapping threshold
31 March 2019 and later years47%$30,000

Note : The rebate percentage is the FBT rate for each relevant FBT year. If the total grossed-up taxable value of fringe benefits provided to an employee is more than the capping threshold, a rebate cannot be claimed for the FBT liability on the excess amount. The capping threshold applies even if the rebatable employer did not employ the employee for the full FBT year. For example, if the total grossed-up value of benefits provided to an employee between October and March was $15,000, a rebate applies to all of the FBT payable for providing these benefits.

The organisations that provide certain entertainment benefits under salary packaging arrangements may access a separate capping threshold. Refer to section 6.5 for further information.

6.5 Separate cap for salary packaged entertainment benefits

A separate single grossed-up cap of $5,000 applies to fringe benefits that are salary packaged meal entertainment and entertainment facility leasing expenses. This cap is available to employers able to access an FBT exemption or rebate for the FBT year ending 31 March 2017 and subsequent years. See sections 6.3 and 6.4 for information about the rebate.

Salary packaging

The separate cap only applies to meal entertainment or entertainment facility leasing benefits provided under a salary packaging arrangement. A salary packaging arrangement generally involves an arrangement between you and your employee, whereby your employee agrees to forgo part of their future entitlement to salary or wages in return for you providing them or an associate with benefits of a similar value. A salary packaging arrangement is commonly referred to as salary sacrifice or total remuneration packaging.

Entertainment

The following types of salary packaged entertainment are subject to the cap:

  • entertainment by way of food or drink
  • accommodation or travel in connection with, or to facilitate the provision of, such entertainment
  • entertainment facility leasing expenses.

Refer to Chapter 14 and Chapter 15 for more information about what is entertainment.

Separate cap

Salary packaged entertainment provided is now included in the capping thresholds referred to in sections 6.3 and 6.4 . However, if these capping thresholds are exceeded in a particular year, it is raised by the lesser of:

  • $5,000, and
  • the total grossed-up taxable value of salary packaged entertainment benefits.

This means employers are provided with a single grossed-up cap of $5,000 per employee each FBT year for salary packaged entertainment benefits which remain eligible for concessional FBT treatment. The $5,000 cap is available even if you did not employ the employee for the full FBT year.

Grossing-up and the $5,000 cap

The $5,000 separate cap for meal entertainment and entertainment facility leasing expenses is the grossed-up amount. It is important to work out which gross-up rate to use to calculate whether or not the $5,000 cap has been exceeded. For more information, refer to Goods and Services Tax Ruling GSTR 2001/3 Goods and Services Tax: GST and how it applies to supplies of fringe benefits.

Exceeding the $5,000 cap

The amount of those benefits exceeding the separate grossed-up cap of $5,000 are included in calculating whether the value of all benefits an employee receives during the FBT year exceeds their general FBT exemption or rebate cap.

Remember, this separate cap only applies to fringe benefits that are meal entertainment and entertainment facility leasing expenses if they are under a salary packaging arrangement.

See section 6.9 for more information.

6.6 Concessions available for registered religious institutions

Your organisation is a registered religious institution if it is:

  • a registered charity with the ACNC
  • registered with the ACNC under the charity sub-type 'advancing religion', and
  • an institution.

For more information refer to Registered religious institutions: access to tax concessions .

FBT rebate

Religious institutions are eligible for the FBT rebate when they are a registered charity. If a religious institution is a charity it must be registered with the ACNC as a charity and endorsed by us as a charitable institution to access the FBT rebate.

For more information see section 6.4 .

Other concessions

Registered religious institutions may also be eligible for FBT concessions for benefits they provide to:

  • religious practitioners
  • live-in carers
  • domestic employees.

A registered religious institution does not need to be endorsed by us to access these concessions, but it must be registered with the ACNC as a charity with a sub-type 'advancing religion'.

For more information refer to section 20.5 and also Taxation Ruling TR 2019/3 Fringe benefits tax: benefits provided to religious practitioners.

6.7 Not-for-profit companies and live-in residential carers

The following not-for-profit organisations that provide care for elderly or disadvantaged people, can provide certain FBT exempt benefits to live-in carers:

  • a company that is a registered charity
  • a not-for-profit company that is not a charity (referred to in the FBT legislation as a non-profit company).

The exemption is for live-in carers where the carer resides with the elderly or disadvantaged person in residential accommodation you provide. The benefits that may be exempt include the employees' live-in accommodation, residential fuel, meals or other food and drink.

For your organisation to be a not-for-profit company:

  • it must be a company that is not carried on for the purposes of profit or gain to its individual members
  • its constituent documents must prohibit it from making any distribution, whether in money, property or otherwise, to its members.

Your organisation can be a not-for-profit company and still make a profit. However, any profits it makes must be used to carry out its purposes. The profits must not be distributed to the members.

The prohibition on distributions applies while the organisation is operating, and on its winding up. If it permits the organisation's members to transfer the assets to themselves on winding up, it is not a not-for-profit company.

A not-for-profit company can make payments to its members as bona fide remuneration for services they have provided to it, and as reasonable compensation for expenses incurred on behalf of the organisation.

An organisation carried on for the joint or common benefit of members can qualify as a not-for-profit company. An example would be a professional association established to advance the professional interests of its members.

6.8 Other concessions

Car parking

A car parking fringe benefit and car parking expense payment fringe benefit is exempt from FBT when provided by:

  • registered charities
  • a scientific institution (other than an institution run for the purposes of profit or gain to its shareholders or members)
  • a public educational institution.

Remote area concessions

An extended definition of 'remote' applies to housing benefits provided for employees of:

  • a public hospital
  • a government body where the duties of the employee are exclusively performed in, or in connection with, a public hospital or a not-for-profit hospital
  • a hospital carried on by a not-for-profit society or a not-for-profit association that is a rebatable employer
  • a registered charity
  • a public ambulance service
  • a police service.

This means that more areas will be considered remote for the purposes of the:

  • remote area housing exemption explained at section 10.8
  • remote area residential fuel reduction explained at section 19.2 .

6.9 Calculating FBT - benefits excluded from FBT capping thresholds

The following fringe benefits, which are excluded benefits for reporting purposes, are also specifically excluded from an employee's individual fringe benefits amount and, as such, are not included in the calculation for certain employer's respective capping thresholds:

  • car parking fringe benefits when provided by:
    • registered public benevolent institutions
    • registered health promotion charities
    • public hospitals
    • not-for-profit hospitals
    • public ambulance services, and
    • rebatable employers
  • meal entertainment (not salary packaged) - the provision of benefits that constitute the provision of meal entertainment that is not under a salary packaging arrangement, whether or not the employer elected to value the benefits as meal entertainment fringe benefits. This applies to meal entertainment provided by:
    • registered public benevolent institutions
    • registered health promotion charities
    • public hospitals
    • not-for-profit hospitals
    • public ambulance services, and
    • rebatable employers
  • entertainment facility leasing expenses (not salary packaged) when incurred by:
    • registered public benevolent institutions
    • registered health promotion charities
    • public hospitals
    • not-for-profit hospitals
    • public ambulance services, and
    • rebatable employers.

6.10 Calculating the FBT exemption

Where your organisation (registered health promotion charity or registered public benevolent institution or public or not-for-profit hospital or public ambulance service) provides employees with benefits above the capping threshold), you are subject to FBT on the aggregate non-exempt amount.

In order to calculate your FBT payable, you must first calculate the individual grossed-up type 1 and type 2 non-exempt amounts. To calculate the individual grossed-up type 1 and type 2 non-exempt amounts, and the FBT payable, you will need the following rates.

FBT yearFBT rateType 1 gross-up rateType 2 gross-up rate
Ending 31 March 2019 (and later years)47%2.08021.8868

Table 1 - Calculating the individual grossed-up type 1 and 2 non-exempt amounts

StepActionResult
1Establish what the employee's individual fringe benefits amount would be if the capping concession was not available.

The individual fringe benefits amount is the value of all benefits, other than excluded benefits. For a list of excluded fringe benefits, refer to section 5.2 .

$xxx
2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.$xxx

(Amount 1)
3Identify those fringe benefits not taken into account under Amount 1.

(That is, the result from Step 1 minus the result from Step 2.)

$xxx

(Amount 3)
4Determine the employee's share of the benefits that would be excluded fringe benefits if the capping concession was not available. For a list of excluded fringe benefits, refer to section  5.2 .

Excluded benefits specifically not to be included in this calculation are listed in section 6.9 .

$xxx
5Identify the GST-creditable fringe benefits included in Step 4.$xxx

(Amount 2)
6Identify those excluded fringe benefits that are not taken into account under Amount 2.

(That is, the result from Step 4 minus the result from Step 5.)

$xxx

(Amount 4)
7Add Amount 1 and Amount 2.

(That is, the result from Step 2 plus the result from Step 5.)

Type 1 individual base non-exempt amount
8Use the following formula:
Type 1 individual base non-exempt amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by type 1 gross-up rate.)

Individual grossed-up type 1 non-exempt amount
9Add Amount 3 and Amount 4.

(That is, the result from Step 3 plus the result from Step 6.)

Type 2 individual base non-exempt amount
10Use the following formula:
Type 2 individual base non-exempt amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by type 2 gross-up rate.)

Individual grossed-up type 2 non-exempt amount

Calculating your FBT payable

After calculating the individual grossed-up type 1 and type 2 amounts , you can then calculate your FBT payable.

IfThen
you have not provided entertainment benefits under a salary packaging arrangementfollow the steps in Table 2a.
you have provided entertainment benefits under a salary packaging arrangement to your employeesfollow the steps in Table 2b.

Table 2a - Use this table if you did not provide salary packaged entertainment benefits

StepActionResult
1For each employee add :
  • the individual grossed-up type 1 non-exempt amount

    (from Table 1, Step 8)
  • the individual grossed-up type 2 non-exempt amount

    (from Table 1, Step 10).
The result is the individual grossed-up non-exempt amount.
2Subtract the appropriate capping threshold from the individual grossed-up non-exempt amount for each employee.

Refer to section 6.3 for the appropriate capping threshold.

If the individual grossed-up non-exempt amount is less than or equal to the appropriate capping threshold, the amount calculated under this step is nil.
3Add together all the amounts calculated under Step 2 for each employee.The total is your aggregate non-exempt amount.
4Multiply the result in Step 3 by the FBT rate.The result is your FBT payable.

Table 2b - Use this table if you provided salary packaged entertainment benefits

StepActionResult
1For each employee add :
  • the individual grossed-up type 1 non-exempt amount

    (from Table 1, Step 8)
  • the individual grossed-up type 2 non-exempt amount

    (from Table 1, Step 10).
The result is the individual grossed-up non-exempt amount.
2Subtract the appropriate capping threshold from the individual grossed-up non-exempt amount for each employee.

Refer to section 6.3 for the appropriate capping threshold.

$xxx

If the individual grossed-up non-exempt amount is less than or equal to the appropriate capping threshold, the amount calculated under this step is nil.

If this amount is positive, continue to Step 3.

If this amount is nil or less do not continue.

3From Step 2 at Table 1 (Amount 1), determine how much of that amount relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.$xxx

GST-creditable salary packaged entertainment benefits

4Use the following formula:
Type 1 individual base non-exempt amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 3 multiplied by the type 1 gross-up rate.)

The result is the grossed-up GST creditable salary packaged entertainment benefits
5From Step 3 at Table 1 (Amount 3), determine how much of that amount relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.$xxx

Non-GST creditable salary packaged entertainment benefits

6Use the following formula:
Non-GST creditable salary packaged entertainment benefits×1
1 - FBT rate

(That is, the result from Step 5 multiplied by the type 2 gross-up rate.)

Grossed-up non-GST creditable salary packaged entertainment benefits
7Add the grossed-up GST creditable and grossed-up non-GST creditable salary packaged entertainment benefit amounts.

(That is, the result from Step 4 plus the result from Step 6.)

Grossed-up salary packaged entertainment benefits
8Subtract from the amount calculated at Step 2 the lesser of:
  • $5,000 and
  • the amount calculated at Step 7.

(That is, the result from Step 2 minus $5,000 or the result from Step 2 minus the result from Step 7.)

$xxx

If the result is less than $0, include $0 here.

9Add together all the amounts calculated under Step 8 for each employee.The total is your aggregate non-exempt amount.
10Multiply the result in Step 9 by the FBT rate.The result is your FBT payable.

Example - FBT exemption capping threshold exceeded

An employee of a registered health promotion charity receives the following benefits during the FBT year ending 31 March 2019:

Car fringe benefit$7,700GST taxable supply with an entitlement to GST credits.
Salary packaged restaurant meals$3,300Valued as expense payment benefits. Exempt benefits under section 57A with no entitlement to GST credits.
Reimbursement of school fees$6,000Expense payment fringe benefit. GST-free supplies with no entitlement to GST credits.
Remote area rent reimbursement$3,000Excluded fringe benefit for payment summary reporting purposes only. No entitlement to GST credits.

In order to calculate their FBT payable, the registered health promotion charity must first calculate the individual grossed-up type 1 and type 2 non-exempt amounts.

Table 1 - Calculating the individual grossed-up type 1 and 2 non-exempt amounts

StepActionResult
1Establish what the employee's individual fringe benefits amount would be if the capping concession was not available.

The individual fringe benefits amount is the value of all benefits other than excluded fringe benefits.

The individual fringe benefits amount =

Car fringe benefit + salary packaged restaurant meals + reimbursement of school fees.

$7,700 + $3,300 + $6,000 = $17,000

The individual fringe benefits amount is $17,000.

2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.$7,700

(Amount 1)

In this example, the employer is entitled to GST credits for the car fringe benefit.

3Identify those fringe benefits not taken into account under amount 1.

(That is, the result from Step 1 minus the result from Step 2.)

$17,000 - $7,700 = $9,300

(Amount 3)
4Determine the employee's share of the benefits that would be excluded fringe benefits if the capping concession was not available. These excluded fringe benefits are listed in section  5.2 .

Excluded benefits specifically not to be included in this calculation are listed in section 6.9 .

$3,000

The excluded fringe benefit is the remote area rent reimbursement.

5Identify the GST-creditable fringe benefits included in Step 4.$0

(Amount 2)

The employer is not entitled to GST credits for the remote area rent reimbursement.

6Identify those excluded fringe benefits that are not taken into account under Amount 2.

(That is, the result from Step 4 minus the result from Step 5.)

$3,000 - $0 = $3,000

(Amount 4)
7Add Amount 1 and Amount 2.

(That is, the result from Step 2 plus Step 5.)

$7,700 + $0 = $7,700

The type 1 individual base non-exempt amount is $7,700.

8Use the following formula:
Type 1 individual base non-exempt amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by type 1 gross-up rate.)

$7,700 × 2.0802 = $16,018

(rounded to the nearest dollar).

The individual grossed-up type 1 non-exempt amount is $16,018.

9Add Amount 3 and Amount 4.

(That is, the result from Step 3 plus Step 6.)

$9,300 + $3,000 = $12,300

The type 2 individual base non-exempt amount is $12,300.

10Use the following formula:
Type 2 individual base non-exempt amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by type 2 gross-up rate.)

$12,300 × 1.8868 = $23,208

(rounded to the nearest dollar).

The individual grossed-up type 2 non-exempt amount is $23,208.

After calculating the individual grossed-up type 1 and type 2 amounts, the registered health promotion charity will calculate their FBT payable by following the steps in Table 2b.

Table 2b - Calculating the FBT payable

This table is used as the registered health promotion charity provided salary packaged entertainment benefits.

StepActionResult
1For each employee add :
  • the individual grossed-up type 1 non-exempt amount

    (from Table 1, Step 8)
  • the individual grossed-up type 2 non-exempt amount

    (from Table 1, Step 10).
$16,018 + $23,208 = $39,226

The individual grossed-up non-exempt amount is $39,226.

2Subtract the appropriate capping threshold from the individual grossed-up non-exempt amount for each employee.

The capping threshold for the FBT year ending 31 March 2019 for the registered health promotion charity is $30,000.

$39,226 - $30,000 = $9,226
3From Step 2 at Table 1 (Amount 1), determine how much of that amount relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.$0

The GST-creditable salary packaged entertainment benefits is $0.

4Use the following formula:
Type 1 individual base non-exempt amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 3 multiplied by type 1 gross-up rate.)

$0

The grossed-up GST creditable salary packaged entertainment benefits is $0.

5From Step 3 at Table 1 (Amount 3), determine how much of that amount relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.$3,300 - salary packaged restaurant meals

The non-GST creditable salary packaged entertainment benefits is $3,300

6Use the following formula:
Non-GST creditable salary packaged entertainment benefits×1
1 - FBT rate

(That is, the result from Step 5 multiplied by type 2 gross-up rate.)

$3,300 × 1.8868 = $6,226

(rounded to the nearest dollar)

The grossed-up non-GST creditable salary packaged entertainment benefits is $6,226.

7Add the grossed-up GST creditable and grossed-up non-GST creditable salary packaged entertainment benefit amounts.

(That is, the result from Step 4 plus the result from Step 6.)

$0 + $6,226

= $6,226

The grossed-up salary packaged entertainment benefits is $6,226.

8Subtract from the amount calculated at Step 2 the lesser of:
  • $5,000 and
  • the amount calculated at Step 7 ($6,226).

(That is, the result from Step 2 minus $5,000 or the result from Step 2 minus the result from Step 7.)

$9,226 - $5,000 = $4,226
9Add together all the amounts calculated under Step 8 for each employee.As there is only one employee, the result is the same as for Step 8. The aggregate non-exempt amount is $4,226.
10Multiply the result in Step 9 by the FBT rate.$4,226 × 0.47

= $1,986.22

The FBT payable is $1,986.22.

6.11 Calculating the FBT rebate

Use the following formula to calculate the rebate available to you:

FBT rebate percentage×(gross tax - aggregate non-rebatable amount)×rebatable days in year
total days in year
  • FBT rebate percentage is the FBT rate for the relevant FBT year.
  • Gross tax is the FBT you would have paid if you had not been entitled to claim a rebate.
  • Rebatable days in the year are the number of days during the FBT year that you qualified as a rebatable employer.

For the purpose of calculating the rebate, the total days in the year means the number of days you were an employer. It does not refer to the total number of days in the year.

The aggregate non-rebatable amount is the proportion of the taxable value of fringe benefits for which you can't obtain a rebate.

In order to calculate your FBT payable, you can use the steps in the tables below.

To calculate your FBT payable, you need to first calculate your gross tax (see Table 1). You also need the following rates.

Table - FBT Rate, gross-up rates, rebate percentage and cap

FBT year ending

FBT rate

Type 1 gross-up rateType 2 gross-up rateFBT rebate percentageFBT rebate capSalary packaged meal entertainment and entertainment facility leasing cap

31 March 2018 (and onwards)

47%2.08021.886847%$30,000$5,000

Table 1 - Calculating your gross tax

Follow the steps below to calculate your gross tax.

StepActionResult
1Establish the employee's individual fringe benefits amount. The individual fringe benefits amount is the value of all benefits other than excluded benefits.

For a list of excluded fringe benefits, refer to Reportable fringe benefits.

$xxx
2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.$xxx

(Amount 1)
3Identify those fringe benefits not taken into account in the calculation for Amount 1.

(That is, the result from Step 1 minus the result from Step 2.)

$xxx

(Amount 3)
4Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits .$xxx
5Identify the GST-creditable fringe benefits included in Step 4.$xxx

(Amount 2)
6Identify those excluded fringe benefits that are not taken into account under Amount 2.

(That is, the result from Step 4 minus the result from Step 5.)

$xxx

(Amount 4)
7Add Amount 1 and Amount 2.

(That is, the result from Step 2 plus the result from Step 5.)

Type 1 individual fringe benefits taxable amount
8Use the following formula:
Type 1 individual fringe benefits amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by type 1 gross-up rate.)

Individual grossed-up type 1 fringe benefits taxable amount
9Add Amount 3 and Amount 4.

(That is, the result from Step 3 plus the result from Step 6.)

Type 2 individual fringe benefits taxable amount
10Use the following formula:
Type 2 individual fringe benefits amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by type 2 gross-up rate.)

Individual grossed-up type 2 fringe benefits amount
11For each employee add:
  • the individual grossed-up type 1 fringe benefits amount
  • the individual grossed-up type 2 fringe benefits amount.

(That is, the result from Step 8 plus the result from Step 10.)

Individual fringe benefits taxable amount
12Add together the individual fringe benefits taxable amount calculated for every employee.

(That is, the result from Step 11 for every employee.)

Total fringe benefits taxable amount
13Multiply the total fringe benefits taxable amount by the FBT rate.

(That is, the result from Step 12 multiplied by FBT rate.)

Gross tax

You need to then calculate your FBT rebate (see Table 2, following).

IfThen
you do not provide any of the following benefits:
  • benefits that would be a car parking fringe benefit
  • benefits that constitute the provision of meal entertainment or entertainment facility leasing expenses; and
  • not provided under a salary packaging arrangement
  • enter the amount calculated at Step 12 in Table 1 into Step 11 in Table 2 below
  • complete Step 12 in Table 2 below
  • then move on to Table 2a or Table 2b
  • then move on to Table 3.
you do provide any of the following benefits:
  • benefits that would be a car parking fringe benefit
  • benefits that constitute the provision of meal entertainment (and that are provided under a salary packaging arrangement
  • benefits attributable to entertainment facility leasing expenses (and that are provided under a salary packaging arrangement
start from Step 1 in Table 2 below.

Table 2 - Calculating your FBT rebate

Follow the steps below to calculate your FBT rebate.

StepActionResult
1Establish the employee's individual fringe benefits amount.

The individual fringe benefits amount is the value of all benefits other than excluded benefits. These excluded fringe benefits are listed in Reportable fringe benefits .

(This will be the same amount calculated in Table 1, Step 1.)

$xxx
2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.

(This will be the same amount calculated in Table 1, Step 2.)

$xxx

(Amount 1)
3Identify those fringe benefits not taken into account in the calculation for Step 2.

(That is, the result for Step 1 minus the result for Step 2.

This will be the same amount calculated in Table 1, Step 3.)

$xxx

(Amount 3)
4Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits .

Excluded benefits specifically not to be included in this calculation are listed in section 6.9 .

$xxx
5Identify the GST-creditable fringe benefits included in Step 4.$xxx

(Amount 2)
6Identify those excluded fringe benefits that are not taken into account under Step 5.

(That is, the result for Step 4 minus the result for Step 5.)

$xxx

(Amount 4)
7Add Amount 1 and Amount 2.

(That is, the result from Step 2 plus the result from Step 5.)

Type 1 individual base non-rebatable amount
8Use the following formula:
Type 1 individual base non-rebatable amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by type 1 gross-up rate.)

Individual grossed-up type 1 non-rebatable amount
9Add Amount 3 and Amount 4

(That is, the result from Step 3 plus the result from Step 6.)

Type 2 individual base non-rebatable amount
10Use the following formula:
Type 2 individual base non-rebatable amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by type 2 gross-up rate.)

Individual grossed-up type 2 non-rebatable amount
11For each employee add:
  • the individual grossed-up type 1 non-rebatable amount for the FBT year

    (That is, the result from Step 8.)
  • the individual grossed-up type 2 non-rebatable amount for the FBT year

    (That is, the result from Step 10.)
The result is the individual grossed-up non-rebatable amount for the employee.
12Subtract the FBT rebate cap from the individual grossed-up non-rebatable amount for each employee.

(That is, the result from Step 11 minus the FBT rebate cap.)

If the individual grossed-up non-rebatable amount for an employee is equal to or less than the FBT rebate cap, the amount calculated under this step is nil.

The steps you continue with to calculate your rebate depend on whether you have provided salary packaged meal entertainment and entertainment facility leasing expense benefits to your employees.

IfThen
you have not provided meal entertainment or entertainment facility leasing expense benefits under a salary packaging arrangementfollow the steps in Table 2a.
you have provided meal entertainment or entertainment facility leasing expense benefits under a salary packaging arrangementfollow the steps in Table 2b.

Table 2a - Calculating the FBT rebate continued

Use this table if you did not provide salary packaged entertainment benefits

StepActionResult
1Add together the amounts calculated at Table 2, Step 12 for each employee.$xxx
2Multiply the total amount calculated under Step 1 by the FBT rate.The result is your aggregate non-rebatable amount for the FBT year.
3Use this formula:
FBT rebate percentage×(gross tax - aggregate non-rebatable amount)×number of days in FBT year you were a rebatable employer
total days in FBT year

That is:

FBT rebate percentage×(table 1, Step 13 minus Table 2a Step 2)×rebatable days in year
total days in year
The result is your FBT rebate.

You then need to calculate your FBT payable (see table 3, following).

Table 2b - Calculating the FBT rebate continued

Use this table if you provide salary packaged entertainment benefits

Note: If the amount calculated at Table 2, Step 12 is nil, you can enter $0 at Step 7 in the table below for that employee and continue to Step 8.

StepActionResult
1Determine how much of the employee's individual fringe benefits amount relates to salary packaged entertainment benefits.

(That is, how much of the amount at Table 1, Step 1 relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.)

$xxx
2Determine how much of the employee's individual fringe benefits amount relates to GST creditable salary packaged entertainment benefits.

(That is, how much of the amount at Table 1 Step 2 relates to GST creditable salary packaged entertainment benefits.)

$xxx

GST creditable salary packaged entertainment benefits

3Determine how much of the individual grossed-up non-rebatable amount relates to non-GST creditable salary packaged entertainment benefits

(That is, the result for Step 1 minus the result for Step 2.)

$xxx

Non-GST creditable salary packaged entertainment benefits.

4Gross up the GST creditable salary packaged entertainment benefits using the following formula:
GST creditable salary packaged entertainment benefits×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 2 multiplied by type 1 gross-up amount.)

Individual grossed-up GST creditable salary packaged entertainment benefits amount.
5Gross up the non-GST creditable salary packaged entertainment benefits using the following formula
Non-GST creditable salary packaged entertainment benefits×1
1 - FBT rate

(That is, the result from Step 3 multiplied by type 2 gross-up rate.)

Individual grossed-up non-GST creditable salary packaged entertainment benefits.
6Add the Individual grossed-up GST creditable and Individual grossed-up non-GST creditable salary packaged entertainment benefits.

(That is, add the amount calculated at Step 4 and Step 5.)

Individual grossed-up salary packaged entertainment benefits
7Subtract from the amount calculated at Table 2, Step 12 the lesser of:
  • $5,000 and
  • the amount calculated at Step 6.

(but not below nil)

$xxx

Use nil if the result is less than $0.

8Add together the amounts calculated at Step 7 for each employee.$xxx
9Multiply the amount calculated under Step 8 by the FBT rate.The result is your aggregate non-rebatable amount for the FBT year.
10Use the following formula:
FBT rebate percentage×(gross tax - aggregate non-rebatable amount)×number of days in FBT year you were a rebatable employer
total days in FBT year

That is:

FBT rebate percentage×(Table 1, Step 13 minus Table 2b Step 9)×rebatable days in year
total days in year
The result is your FBT rebate.

You then need to calculate your FBT payable (see Table 3).

Table 3 - Calculating your FBT payable

Use the following step to calculate your FBT payable.

StepActionResult

1

Gross tax - FBT rebate

(That is, the result from Table 1, Step 13 minus the result from Table 2a, Step 3 or Table 2b, Step 10.)

The result is your FBT payable.

Example - FBT rebate capping threshold exceeded

A rebatable employer provides the following benefits to a single employee during the FBT year. The employer was an employer for the full year and a rebatable employer from 31 October 2018 in the FBT year ending 31 March 2019.

Car fringe benefit$7,700GST taxable supply with an entitlement to GST credits.
Salary packaged restaurant meals$3,300Valued as expense payment and there is an entitlement to GST credits.
Reimbursement of school fees$6,000Expense payment fringe benefit. GST-free supply with no entitlement to GST credits.
Remote area rent reimbursement$3,000Excluded fringe benefit for payment summary or income statement reporting purposes only. No entitlement to GST credits.

To calculate their FBT payable, the rebatable organisation needs to first calculate their gross tax (see Table 1).

Table 1 - Calculating the gross tax

StepActionResult
1Establish the employee's individual fringe benefits amount. The individual fringe benefits amount is the value of all benefits other than excluded benefits.Car fringe benefit + restaurant meals + reimbursement of school fees

$7,700 + $3,300 + $6,000 = $17,000

The individual fringe benefits amount is $17,000.

2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.$11,000

(Amount 1)

In this example, the employer is entitled to GST credits for the car fringe benefit and salary packaged restaurant meals.

3Identify those fringe benefits not taken into account in the calculation for Amount 1

(That is, the result from Step 1 minus the result from Step 2.)

$17,000 - $11,000 = $6,000

(Amount 3)
4Determine the employee's share of the benefits that would be excluded fringe benefits.$3,000

The excluded fringe benefit is the remote area rent reimbursement.

5Identify the GST-creditable fringe benefits included in Step 4.$0

(Amount 2)

In this example, the employer is not entitled to GST credits for the remote area rent reimbursement.

6Identify those excluded fringe benefits that are not taken into account under Amount 2

(That is, the result from Step 4 minus the result from Step 5.)

$3,000 - $0 = $3,000

(Amount 4)
7Add Amount 1 and Amount 2

(That is, the result from Step 2 plus the result from Step 5.)

$11,000 + $0 = $11,000

The type 1 individual fringe benefits taxable amount is $11,000.

8Use the following formula:
Type 1 individual base non-exempt amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by 2.1463.)

$11,000 × 2.0802 = $22,882

(rounded to the nearest dollar)

The individual grossed-up type 1 fringe benefits taxable amount is $22,882.

9Add Amount 3 and Amount 4

(That is, the result from Step 3 plus the result from Step 6.).

$6,000 + $3,000 = $9,000

The type 2 individual fringe benefits taxable amount is $9,000.

10Use the following formula:
Type 2 individual fringe benefits amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by 1.9608.)

$9,000 × 1.8868 = $16,981

(rounded to the nearest dollar)

The individual grossed-up type 2 fringe benefits amount is $16,981.

11For each employee add:
  • the individual grossed-up type 1 fringe benefits amount
  • the individual grossed-up type 2 fringe benefits amount

(That is, the result from Step 8 plus the result from Step 10.)

$22,882 + $16,981 = $39,863

The individual fringe benefits taxable amount is $39,863.

12Add together the individual fringe benefits taxable amount calculated for every employee

(That is, the result from Step 11 for every employee.)

There is only one employee, so the total fringe benefits taxable amount is $41,256.
13Multiply the total fringe benefits taxable amount by the FBT rate

(That is, the result from Step 12 multiplied by 49%.)

$39,863 × 0.47 = $18,735.61

The gross tax is $18,735.61.

The employer then needs to then calculate their FBT rebate (see Table 2).

Table 2 - Calculating your FBT rebate

StepActionResult
1Establish the employee's individual fringe benefits amount.

The individual fringe benefits amount is the value of all benefits other than excluded benefits.

(This will be the same amount calculated in Table 1, Step 1).

$17,000

(From Table 1, Step 1)

2Identify the amount of GST-creditable fringe benefits included in the amount for Step 1.

(This will be the same amount calculated in Table 1, Step 2).

$11,000

(Amount 1)

(From Table 1, Step 2)

3Identify those fringe benefits not taken into account in the calculation for Step 2

(That is, the result from Step 1 minus the result from Step 2.

This will be the same amount calculated in Table 1, Step 3).

$6,000

(Amount 3)

(From Table 1, Step 3)

4Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits .

Excluded benefits specifically not to be included in this calculation are listed in section 6.8 .

$3,000

(The $3,000 is the remote area rent reimbursement. The restaurant meals of $3,300 are provided under a salary packaging arrangement and are not excluded in this FBT year).

5Identify the GST-creditable fringe benefits included in Step 4.$0

(Amount 2)

(The employer is not entitled to GST credits for the remote area rent reimbursement).

6Identify those excluded fringe benefits that are not taken into account under Step 5.

(That is, the result from Step 4 minus the result from Step 5.)

$3,000 - $0 = $3,000

(Amount 4)
7Add Amount 1 and Amount 2.

(That is, the result from Step 2 plus the result from Step 5.)

$11,000 +$0 = $11,000

The type 1 individual base non-rebatable amount is $11,000.

8Use the following formula:
Type 1 individual base non-rebatable amount×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 7 multiplied by 2.1463.)

$11,000 × 2.0802 = $22,882

(rounded to nearest dollar)

The individual grossed-up type 1 non-rebatable amount is $22,882.

9Add Amount 3 and Amount 4

(That is, the result from Step 3 plus the result from Step 6.)

$6,000 + $3,000 = $9,000

The type 2 individual base non-rebatable amount is $9,000.

10Use the following formula:
Type 2 individual base non-rebatable amount×1
1 - FBT rate

(That is, the result from Step 9 multiplied by 1.9608.)

$9,000 × 1.8868 = $16,981

(rounded to the nearest dollar)

The individual grossed-up type 2 non-rebatable amount is $16,981.

11For each employee add:
  • the individual grossed-up type 1 non-rebatable amount for the FBT year

    (That is, the result from Step 8.)
  • the individual grossed-up type 2 non-rebatable amount for the FBT year

    (That is, the result from Step 10.)
$22,882 + $16,981 = $39,863

The individual grossed-up non-rebatable amount is $39,863.

12Subtract $30,000 from the individual grossed-up non-rebatable amount for each employee.$39,863 - $30,000 = $9,863

Table 2b - Calculating the FBT rebate continued

The employer must use Table 2b to calculate the FBT rebate as they provided salary packaged entertainment benefits.

StepActionResult
1Determine how much of the employee's individual fringe benefits amount relates to salary packaged entertainment benefits

(That is, how much of the amount at Table 1, Step 1 relates to salary packaged meal entertainment and entertainment facility leasing expense benefits.)

$3,300

The salary packaged restaurant meals of $3,300 are meal entertainment.

2Determine how much of the employee's individual fringe benefits amount relates to GST creditable salary packaged entertainment benefits

(That is, how much of the amount at Table 1 Step 2 relates to GST creditable salary packaged entertainment benefits.)

$3,300

That salary packaged restaurant meals are GST creditable salary packaged entertainment benefits.

3Determine how much of the individual grossed-up non-rebatable amount relates to non-GST creditable salary packaged entertainment benefits

(That is, the result for Step 1 minus the result for Step 2.)

$3,300 - $3,300 = $0

There are no non-GST creditable salary packaged entertainment benefits.

4Gross up the GST creditable salary packaged entertainment benefits using the following formula:
GST creditable salary packaged entertainment benefits×FBT rate + GST rate
(1 - FBT rate) × (1 + GST rate) × FBT rate

(That is, the result from Step 2 multiplied by type 1 gross-up amount.)

$3,300 × 2.0802 = $6,864.66

The Individual grossed-up GST creditable salary packaged entertainment benefits amount is $6,864.66.

5Gross up the non-GST creditable salary packaged entertainment benefits using the following formula
Non-GST creditable salary packaged entertainment benefits×1
1 - FBT rate

(That is, the result from Step 3 multiplied by type 2 gross-up rate.)

$0 × 1.8868 = $0

The Individual grossed-up non-GST creditable salary packaged entertainment benefits amount is $0.

6Add the Individual grossed-up GST creditable and Individual grossed-up non-GST creditable salary packaged entertainment benefits

(That is, add the amount calculated at Step 4 and Step 5.)

$6,864.66 + $0 =$6,864.66

The Individual grossed-up salary packaged entertainment benefits is $6,864.66.

7Subtract from the amount calculated at Table 2, Step 12 the lesser of:
  • $5,000 and
  • the amount calculated at Step 6 ($6,864.66).
$9,863 - $5,000 = $4,863
8Add together the amounts calculated at Step 7 for each employee.There is only one employee, so this amount is $4,863.
9Multiply the amount calculated under Step 8 by the FBT rate.$4,863 × 0.47 = $2,285.61

The aggregate non-rebatable amount is $2,285.61.

10Use the following formula:
FBT rebate percentage×(gross tax - aggregate non-rebatable amount)×number of days in FBT year you were a rebatable employer
total days in FBT year

That is:

FBT rebate percentage×(Table 1, Step 13 minus Table 2b Step 9)×rebatable days in year
total days in year
0.47 × ($18,735.61 - $2,285.61) × 152/365 0.47 × $16,450 × 152/365 = $3,219.69

The FBT rebate is $3,219.69.

The employer then needs to calculate their FBT payable

Use the following step to calculate your FBT payable.

StepActionResult
1Gross tax - FBT rebate

(That is, the result from table 1, Step 13 minus the result from Table 2b, Step 10.)

$18,735.61 - $3,219.69 = $15,515.92

The FBT payable is $15,515.92.

6.12 Reportable fringe benefits

If the value of certain fringe benefits provided to your employees or their associates exceeds $2,000 in an FBT year, you must record the grossed-up taxable value of those benefits on their payment summaries for the corresponding income year.

This FBT reporting requirement applies even if you organisation is not liable to pay FBT. For a list of benefits that are excluded from the reporting requirements, refer to Reportable fringe benefits .

More information

For more on:

  • reportable fringe benefits, refer to Reportable fringe benefits - facts for employees
  • the FBT gross-up rates, refer to Taxation Ruling TR 2001/2 Fringe benefits tax: The operation of the new fringe benefits tax gross-up formula to apply from 1 April 2000
  • the interaction between FBT and GST, refer to Goods and Services Tax Ruling GSTR 2001/3 Goods and Services Tax: GST and how it applies to supplies of fringe benefits
  • charities, refer to Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities .

Latest update

January 2020

SectionChanges and updates
ThroughoutUpdated to provide consistency between chapters and style in accordance with corporate requirements
6.3Information added to clarify which cap applies when an employer is a public hospital and registered public benevolent institution.

Details of previous updates are available through the versions linked to in the table below.

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

ATO references:
NO Fringe benefits tax - a guide for employers

Fringe benefits tax - a guide for employers
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