Taxation Ruling

TR 2001/2A3 - Addendum

Fringe benefits tax: the operation of the new fringe benefits tax gross-up formula to apply from 1 April 2000

FOI status:

may be released

Addendum

This Addendum amends Taxation Ruling TR 2001/2 to take account of the changes in the FBT rate from 1 April 2006 and consequential adjustments to the type 1 and type 2 gross-up rates.

Taxation Ruling TR 2001/2 is amended as follows:

1. Paragraph 5

After the paragraph insert:


5A. The numbers and examples which use the FBT rate of 48.5% throughout this Ruling are relevant for the FBT years from 1 April 2000 to 31 March 2006. The changes with effect from 1 April 2006, are as follows:

·
FBT rate changed from 48.5% to 46.5%;
·
higher gross-up rate changes from 2.1292 to 2.0647; and
·
lower gross-up rate changes from 1.9417 to 1.8692.


5B. The examples that appear in this Ruling for both type 1 and type 2 benefits have been calculated on the former gross-up rates as listed above. This will necessitate substituting those rates with the new gross-up rates when establishing the fringe benefits tax payable from 1 April 2006.

2. Paragraph 10

After:


(48.5%).

insert:


From 1 April 2006, the FBT rate will be 46.5%.

3. Paragraph 15

After:


(10%).

insert:


From 1 April 2006 when the FBT rate is 46.5%, this will result in a type 1 gross-up rate of 2.0647.

4. Paragraph 19

After:


(48.5%).

insert:


From 1 April 2006 when the FBT rate is 46.5%, this will result in a type 2 gross-up rate of 1.8692.

5. Paragraph 48

After:


The higher gross-up rate is therefore 2.1292.

insert:


Where the FBT rate is 46.5% and GST rate is 10% the formula becomes:

(0.465 + 0.1)/((1 - 0.465) x (1 + 0.1) x (0.465))

= (0.565/0.2736525)

= 2.0647

6. Paragraph 49

After:


$14,521

insert:


( Note : All examples below for both type 1 and type 2 benefits have been calculated on the former gross-up rates, using an FBT rate of 48.5%.)

7. Paragraph 60

After:


The lower gross-up rate is therefore 1.9417.

insert:


Where the FBT rate is 46.5% the formula becomes:

1/(1-0.465)

= 1/0.535

= 1.8692

Commissioner of Taxation
12 July 2006

References

ATO references:
NO 2005/18404

ISSN 1039 - 0731

Related Rulings/Determinations:

TR 2001/2A
TR 2001/2A2