Show download pdf controls
  • Paying FBT

    If your not-for-profit organisation provides a fringe benefit to its employees or to associates of its employees, it may have an 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 a FBT liability, the taxable value of fringe benefits provided must be grossed up.

    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 – this rate is used where the benefit provider is entitled to a GST credit for the provision of a benefit
    • a lower (type 2) gross-up rate – this rate is 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.

    See also:

    Last modified: 12 Dec 2017QC 46329