Fringe benefits tax
Fringe benefits tax (FBT) is paid on certain benefits employers provide to their employees in place of wages.
All benefits subject to the Fringe Benefits Tax Assessment Act 1986, except tax-exempt body entertainment fringe benefits, are wages for payroll tax purposes and are liable.
Taxable value for fringe benefits
The taxable value is determined by grossing up the total Type1 and Type 2 aggregate amounts from your FBT return by 1.8692.
Example
A business’s 31 March FBT return has:
Type 1 aggregate amounts = $100,000
Type 2 aggregate amounts = $300,000
The taxable value is $400,000 x 1.8692 = $747,680.
Note: the ’reportable value’ shown on the taxation statements of employees should not be used as it is substantially less than the value to be returned for payroll tax.
Exempt or nil FBT value
The Australian Taxation Office guidelines are used in regards to exempt and nil value fringe benefits.
For payroll tax purposes, fringe benefits:
have a nil taxable value if they have a nil taxable value under the Fringe Benefits Tax Assessment Act 1986
are not a wage if they are exempt under the Fringe Benefits Tax Assessment Act 1986, except for deposits to the Superannuation Holding Accounts Special Account.
Return of fringe benefits amounts for payroll tax purposes
Monthly
The amount to be declared as your taxable wages for July to May is 1/12 of the taxable value from your FBT return for the year ending 31 March (immediately preceding the current financial year).
Example
A business’s 31 March FBT return has:
Type 1 aggregate amounts = $80,000
Type 2 aggregate amounts = $150,000
The taxable value is $230,000 x 1.8692 = $429,916
The amount to be used for monthly returns is $429,916 /12 = $35,826.
Note: You must have 15 months or more of fringe benefit payments to elect to use this method. If you have less than 15 months of fringe benefit payments, you must provide actual FBT amounts.
Annually
The amount to be declared in your Annual Reconciliation is the taxable value from your FBT return for the year ending 31 March (immediately preceding the Annual Reconciliation).
Example
A business’s 31 March FBT return has:
Type 1 aggregate amounts = $50,000
Type 2 aggregate amounts = $100,000
The taxable value for the June Annual Reconciliation is $150,000 x 1.8692 = $280,380.
Determining the NSW value of fringe benefits
If you pay fringe benefits in NSW and interstate but cannot accurately determine your NSW fringe benefits value, you can pro-rata your FBT value for NSW based on the ratio of NSW wages to total Australian wages.
This approach can be used provided the value of fringe benefits paid in each state is proportional to the wages paid in that state.
Example
Total Australian taxable wages including benefits = $1,000,000
Less total Australian Fringe Benefits taxable value = $200,000
Therefore total Australian non benefits wages = $800,000
Total NSW non benefits wages are $500,000
Therefore the formula is: $500,000/$800,000 x $200,000 = $125,000.
Ceasing to employ
If you cease to be liable for payroll tax, the amount of fringe benefits you declare in your final payroll tax return will be the difference between:
a) the actual taxable value of the NSW fringe benefits paid or payable for the period from the preceding 1 July to the cease date, and
b) the taxable value of the NSW fringe benefits declared each month for payroll tax during that period.
More information
