Fringe benefits tax - a guide for employers
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Chapter 6 - Non-profit organisations and fringe benefits tax
| 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). |
If your organisation provides a fringe benefit to its employees or to associates of its employees, your organisation may have a fringe benefits tax (FBT) liability. Depending on your type of organisation, certain benefits you provide to employees receive concessional FBT treatment. From 1 July 2005, charities that want to access FBT concessions must be endorsed by us.
6.1 Employees, volunteers or contractors
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.
For the purposes of FBT, an employee is a person who receives (or is entitled to receive) salary or wages, or a benefit that has been provided in respect of their employment. 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. If an organisation provides non-cash benefits to workers in lieu of salary and wages, FBT can apply.
6.2 FBT concessions and endorsement
Few tax concessions apply to all organisations in the non-profit sector - they tend to apply to particular types of non-profit organisation.
Charities that are not currently endorsed as income tax exempt charities, and want to access charity tax concessions, will need to apply for endorsement . These charities can indicate on their application form that they want to be endorsed for some concessions and not others.
An endorsed charity's details are recorded on the Australian Business Register so that the charity's endorsement for tax concessions can be viewed by the public.
The following table provides a summary of FBT concessions available to various groups of non-profit organisations.
Type of organisation | FBT concessions | Endorsement required?
|
Charitable funds | No FBT concessions available From 1 July 2005, charitable funds are no longer considered to be rebatable employers and are no longer entitled to the FBT rebate. | No |
Charitable institutions | FBT rebate (subject to a capping threshold of $30,000) Qualifying employers are entitled to have their liability reduced by a rebate equal to 48% of the gross FBT payable (subject to a $30,000 capping). If the total grossed-up taxable value of benefits is more than $30,000, a rebate can't be claimed for the FBT liability on the excess amount (or on the aggregate non-rebatable amount). | Yes |
Public benevolent institution (PBI)
Health promotion charity (HPC) | FBT exemption (subject to a capping threshold of $30,000) As a PBI or health promotion charity, benefits you provide to your employees are exempt from FBT where the total grossed-up value of certain fringe benefits for each employee during the FBT year is $30,000 or less. If your employees receive grossed-up benefits above this threshold, you are liable for FBT on the excess (or the aggregate non-exempt amount). | Yes |
Hospitals (public and non-profit)
Public ambulance service | FBT exemption (subject to a capping threshold of $17,000) Benefits provided by public and non-profit hospitals and public ambulance services are exempt from FBT, if the total grossed-up taxable value of certain fringe benefits provided to each employee is $17,000 or less. If your employees receive grossed-up benefits above this threshold, you are liable for FBT on the excess (or the aggregate non-exempt amount). Note: The $17,000 capping threshold will apply regardless of whether the organisation is also a PBI. | No |
Certain non-government and non-profit organisations - also referred to as 'rebatable employers' eg public education institutions and employer associations | FBT rebate (subject to a capping threshold of $30,000) Qualifying employers are entitled to have their liability reduced by a rebate equal to 48% of the gross FBT payable (subject to a $30,000 capping). If the total grossed-up taxable value of benefits is more than $30,000, a rebate can't be claimed for the FBT liability on the excess amount (or on the aggregate non-rebatable amount). | For those that are charities - Yes For those that are not charities - No |
Religious institutions | FBT rebate (subject to a capping threshold of $30,000) In addition, religious practitioners and certain employees of religious institutions may be entitled to other types of concessions as explained in section 20.5 of Fringe benefits tax exempt benefits . | For those that are charities - Yes For those that are not charities -No |
Non-profit company | No FBT concessions available If your activities include caring for elderly or disadvantaged people, you can provide exempt benefits to live-in carers. The condition for exemption is the same as for religious institutions as explained in section 20.5 of Fringe benefits tax exempt benefits . | No |
6.3 Benefits excluded from FBT capping measures
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.
Meal entertainment
The provision of benefits that constitute the provision of meal entertainment, whether or not the employer elected to value the benefits as meal entertainment fringe benefits. This applies to meal entertainment provided by PBIs, HPCs, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
Entertainment facility leasing expenses
Entertainment facility leasing expenses when incurred by PBIs, HPCs, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
Car parking
Car parking fringe benefits when provided by PBIs, HPCs, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
6.4 Explanation of terms
Charity tax concessions
Charities are required to be endorsed by us to access the following concessions:
- income tax exemption
- goods and services (GST) charity concessions
- FBT rebate (subject to $30,000 capping threshold)
- FBT exemption (subject to either the $17,000 or $30,000 capping thresholds).
Charity
A charity is an entity established for altruistic purposes that the law regards as charitable. We do not set the criteria to decide whether or not an organisation is a charity. Criteria for deciding what is a charity have been established by case law.
Charities include most religious institutions, aged persons homes, homeless hostels, organisations relieving the special needs of people with disabilities and societies that promote the fine arts.
The characteristics of a charity are:
- it is an entity that is also a trust fund or an institution
- it exists for the public benefit or the relief of poverty
- its purposes are charitable within the legal sense of that term
- it is non-profit, and
- its sole or dominant purpose is charitable.
A charitable purpose is one which the law regards as charitable. Charitable purposes are any of the following purposes:
- the relief of poverty or sickness or the needs of the aged
- the advancement of education
- the advancement of religion
- other purposes beneficial to the community
- the provision of child care services on a non-profit basis.
A statutory extension to the meaning of charity applies from 1 July 2004. The provision of child care services on a non-profit basis is accepted as a charitable purpose from this date.
Many community organisations are not charities. An entity is not a charity if:
- it is primarily for sporting, recreational or social purposes
- it is primarily for political, lobbying or promotional purposes.
Government departments and instrumentalities carrying out the ordinary functions of government are unlikely to be charities.
Charitable fund
To be this entity type, your organisation must be a charity.
A charitable fund is a fund established under an instrument of trust or a will for a charitable purpose. The purposes set out in the will or instrument of trust must be charitable. Charitable funds mainly manage trust property, and/or hold trust property to make distributions to other entities or people. In contrast, if the trustee mainly carries on activities that are charitable, the fund will be treated as a charitable institution and not as a charitable fund.
Charitable institution
To be this entity type, your organisation must be a charity.
A charitable institution is an establishment, organisation or association that is instituted and operated to advance or promote a charitable purpose. An organisation's purposes can be found in its governing documents and from its activities, history and control.
A charitable institution will carry on charitable activities while a charitable fund mainly manages, and/or holds trust property.
Public benevolent institution
A public benevolent institution (PBI) is a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness. The characteristics of a PBI are:
- it is set up for the needs that require benevolent relief
- it relieves those needs by directly providing services to people suffering from them
- it is carried on for the public benefit
- it is non-profit
- it is an institution, and
- its dominant purpose is providing benevolent relief.
Organisations that may be PBIs include:
- hostels for the homeless
- disability support services
- hospitals and medical clinics
- disaster relief organisations
- refugee relief centres.
A PBI is distinct from a charitable institution. An institution with charitable activities, but not having as its principal objects the relief of poverty, sickness, suffering, distress, misfortune, destitution or helplessness, is not a PBI. A charitable institution may qualify as either a rebatable employer for FBT purposes or as exempt from FBT if it is a HPC.
To access the FBT exemption, the PBI must be the employer of an employee. It is not enough that part of an entity is a PBI - the PBI must be the relevant employer.
Example 1: PBI employer is separate entity
A church has set up Green Care to provide low rental accommodation to people affected by misfortune, disability and destitution. An unincorporated association, Green Care has its own board of management and administrative structure separate from the church. It directly employs the staff working for it and has its own Australian business number (ABN).
Green Care is a PBI and is the employer of the staff working for it.
Green Care is able to seek endorsement in its own right.
Example 2: PBI employer is not separate entity
A church has set up, as part of its operations, Yellow Care, a PBI, to provide low rental accommodation to people affected by misfortune, disability and destitution. While operated by the church according to the church's authoritative structure, Yellow Care has its own management and directly engages the staff working for it under employment contracts. Under the terms of the employment contracts, Yellow Care is liable to pay the salary and wages of its staff. However it is the church that pays the salary and wages of Yellow Care staff. Yellow Care is not an entity in its own right and has no ABN.
It is Yellow Care that employs the staff working for it and is liable to pay salary and wages to those employees under the terms of the employment contract. The fact that the church makes those salary and wage payments to Yellow Care's employees will not result in Yellow Care losing its employer status. Such payments by the church are still in respect of the employment of those employees by Yellow Care.
As Yellow Care is not an entity, it can't seek PBI endorsement in its own right. However, the church can seek PBI endorsement on the basis of operating Yellow Care. This would be allowed as Yellow Care is both a PBI and an employer and the church, provided it exercises its rights within its authoritative structure, maintains necessary control of the operation of Yellow Care.
| The FBT exemption for a PBI employer that an organisation operates does not apply in respect of the organisation's employees generally. It only applies in respect of the employees of the PBI employer itself and is subject to a $30,000 cap per employee. The FBT exemption for a PBI employer would only be available in respect of the employees of Yellow Care. |
Example: PBI is not employer
A church has set up, as part of its operations, Red Care, a PBI, to provide low rental accommodation to people affected by misfortune, disability and destitution. Red Care is part of the church's overall management and administrative structure and does not act as an employer. Red Care is not an entity in its own right and has no ABN. Staff working for Red Care have been engaged by the church as employees and assigned by the church to work for Red Care.
In this case, the church is the relevant employer as it has engaged the staff as common law employees. Although the staff have been assigned to work for Red Care, they don't have a contractual relationship with Red Care. They have only entered into an employment contract with the church.
As Red Care is not the relevant employer, the church can't seek endorsement on the basis of operating a PBI employer.
Health promotion charity
A health promotion charity (HPC) is a non-profit charitable institution whose principal activity is promoting the prevention or control of diseases in human beings. The characteristics of a HPC are that:
- its principal activity is promoting the prevention or control of diseases in human beings, and
- it is a charitable institution.
Examples of activities that can promote the prevention or control of disease include:
- providing relevant information to sufferers of a disease, health professionals, carers and the public
- researching how to detect, prevent or treat diseases
- developing or providing relevant aids and equipment to sufferers of a disease.
Hospitals (public and non-profit)
A hospital is an institution in which patients are received for continuous medical care and treatment for sickness, disease or injury. The provision of accommodation is integral to a hospital's care and treatment.
Clinics that mainly treat ambulatory patients who return to their homes after each visit are not hospitals. However, day surgeries that provide beds for patients to recover after surgery may be hospitals.
Homes to provide nursing care for feeding, cleanliness and the like are not hospitals. However, nursing homes for people suffering from illness are accepted as hospitals.
Hospices for the terminally ill will generally be hospitals. Minor outpatient and nursing care will not prevent an institution being a hospital.
Non-profit hospitals include those run by churches and religious orders.
Rebatable employer
Rebatable employers are certain non-government, non-profit organisations. Those that qualify for an FBT rebate include:
- certain religious, educational, charitable, scientific or public educational institutions
- trade unions and employer associations
- non-profit organisations established to encourage music, art, literature or science
- non-profit organisations established to encourage or promote a game, sport or animal races
- non-profit organisations established for community service purposes
- non-profit organisations established to promote the development of aviation or tourism
- non-profit organisations established to promote the development of Australian information and communications technology resources, and non-profit organisations established to promote the development of the agricultural, pastoral, horticultural, viticultural, aqua cultural, fishing, manufacturing or industrial resources of Australia.
Religious institution
Your organisation will be a religious institution if it is an establishment, organisation or association that is instituted to advance or promote religious purposes.
An institution may have the legal structure of an unincorporated association or a corporation. However, incorporation is not enough, on its own, for an organisation to be an institution. Its activities, size, permanence and recognition will be relevant.
An organisation that is established, controlled and operated by family members and friends would not normally be an institution.
Example
A corporation is set up and controlled by a family. Its object is to spread the gospel. The only activities are holding assets and arranging for the father of the family to speak at churches on some Sundays.
The corporation is not an institution.
An institution will be a religious institution if:
- its objects and activities reflect its character as a body instituted for the promotion of some religious object, and
- the beliefs and practices of the members constitute a religion.
The term 'religion' is not confined to major religions such as Christianity, Islam and Judaism, but also extends to Buddhism, Taoism, Jehovah's Witness, the Free Daist Communion of Australia and Scientology. The categories of religion are not closed. Nonetheless, to be a religion there must be:
- belief in a supernatural being, thing or principle
- acceptance of canons of conduct that give effect to that belief, but that don't offend against the ordinary laws.
Religious practitioner
A religious practitioner is someone who is:
- a minister of religion
- a student at an institution who is undertaking a course of instruction in the duties of a minister of religion
- a full-time member of a religious order, or
- a student at a college conducted solely for training people to become a member of a religious order.
Non-profit company
For your organisation to be a non-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 non-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 it's winding up. If it permits the organisation's members to transfer the assets to themselves on winding up, it is not a non-profit company.
A non-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 their members can qualify as non-profit companies. An example would be a professional association established to advance the professional interests of its members.
6.5 Calculating the FBT exemption
Where your organisation (PBI, HPC, public or non-profit hospital or public ambulance service) provides employees with benefits above the FBT exemption capping (either $30,000 or $17,000), you are subject to FBT on the aggregate non-exempt amount.
| The PBI, HPC and rebatable employers calculator will help you calculate the FBT liability for PBIs, HPCs and rebatable employers. The $30,000 capping threshold only has been considered in the calculator. You can also use the steps in tables 1 and 2 below to help you calculate the FBT payable. |
In order to calculate your FBT payable, you 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
Step | Action | Result |
1 | Establish 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 Reportable fringe benefits . | $xxx |
2 | Identify the amount of GST-creditable fringe benefits included in the amount for step 1. | $xxx
|
3 | Identify those fringe benefits not taken into account under amount
1
| $xxx
|
4 | Determine 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 Reportable fringe benefits . Excluded benefits specifically not to be included in this calculation are listed in section 6.3 . | $xxx |
5 | Identify the GST-creditable fringe benefits included in step 4. | $xxx
|
6 | Identify those excluded fringe benefits that are not taken into account under amount
2
| $xxx
|
7 | Add amount 1 and amount 2
| Type 1 individual base non-exempt amount |
8 | Use the following formula: Type 1 individual base non-exempt amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | Individual grossed-up type 1 non-exempt amount |
9 | Add amount 3 and amount 4
| Type 2 individual base non-exempt amount |
10 | Use the following formula: Type 2 individual base non-exempt amount X
1
(that is, the result from step 9 x 1.8692). | Individual grossed-up type 2 non-exempt amount |
After calculating the individual grossed-up type 1 and type 2 amounts , follow the steps in table 2 to calculate your FBT payable .
Table 2 - Calculating your FBT payable
Step | Action | Result |
1 | For each employee add :
| The result is the individual grossed-up non-exempt amount . |
2 | Subtract the appropriate capping threshold from the individual grossed-up non-exempt amount for each employee. Capping thresholds:
| If the individual grossed-up non-exempt amount is less than or equal to the appropriate capping threshold ($30,000 or $17,000), the amount calculated under this step is
nil
.
|
3 | Add together all the amounts calculated under step 2 for each employee. | The total is your
aggregate non-exempt amount
.
|
4 | Multiply the result in step 3 by the FBT rate (currently 46.5%). | The result is your FBT payable . |
Example - FBT exemption capping threshold exceeded
An employee of a HPC receives the following benefits during an FBT year: | ||
A car fringe benefit | $7,700 | GST taxable supply with an entitlement to GST credits. |
Restaurant meals | $1,100 | Valued as expense payment fringe benefits. Excluded fringe benefit with an entitlement to GST credits. |
Reimbursement of school fees | $6,000 | Expense payment fringe benefit. GST-free supplies with no entitlement to GST credits. |
Remote area rent reimbursement | $3,000 | Excluded fringe benefit for payment summary reporting purposes only. No entitlement to GST credits. |
In order to calculate their FBT payable, the HPC 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
Step | Action | Result |
1 | Establish 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 + Reimbursement of school fees. $7,700
+ $6,000
The individual fringe benefits amount is $13,700 . |
2 | Identify the amount of GST-creditable fringe benefits included in the amount for step 1. | $7,700
In this example, the employer is entitled to GST credits for the car fringe benefit. |
3 | Identify those fringe benefits not taken into account under amount
1
| $13,700
- $7,700
|
4 | Determine 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 Reportable fringe benefits . Excluded benefits specifically not to be included in this calculation are listed in section 6.3 . | $3,000 The excluded fringe benefits are the restaurant meals fringe benefit and the remote area rent reimbursement. The restaurant meals fringe benefit of $1,100 is specifically not included in this calculation. |
5 | Identify the GST-creditable fringe benefits included in step 4. | $0
The employer is not entitled to GST credits for the remote area rent reimbursement. |
6 | Identify those excluded fringe benefits that are not taken into account under amount
2
| $3,000
- $0
|
7 | Add amount 1 and amount 2
| $7,700
+ $0
The type 1 individual base non-exempt amount is $7,700. |
8 | Use the following formula: Type 1 individual base non-exempt amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | $7,700
x 2.0647
The individual grossed-up type 1 non-exempt amount is $15,898. |
9 | Add amount 3 and amount 4
| $6,000
+ $3,000
The type 2 individual base non-exempt amount is $9,000. |
10 | Use the following formula: Type 2 individual base non-exempt amount X
1
(that is, the result from step 9 x 1.8692). | $9,000
x 1.8692
The individual grossed-up type 2 non-exempt amount is $16,822. |
After calculating the individual grossed-up type 1 and type 2 amounts, the HPC will calculate their FBT payable by following the steps in table 2.
Table 2 - Calculating the FBT payable
Step | Action | Result |
1 | For each employee add :
| $15,898
+
The individual grossed-up non-exempt amount is $32,720. |
2 | Subtract the appropriate capping threshold from the individual grossed-up non-exempt amount for each employee. Capping thresholds:
(that is, the result from step 1 minus the applicable capping threshold). | $32,720
-
|
3 | Add together all the amounts calculated under step 2 for each employee. | As there is only one employee, the result is the same as for step 2, ie $2,720. The aggregate non-exempt amount is $2,720. |
4 | Multiply the result in step 3 by the FBT rate (currently 46.5%). | $2,720
x
The FBT payable by the HPC is $1,264.80. |
6.6 Calculating the FBT rebate
Charitable institutions and most non-government organisations that are income tax exempt, qualify for an FBT rebate. As a rebatable employer, you are eligible for a rebate of 48% of the amount of FBT that would otherwise be payable.
The maximum grossed-up value of benefits that can be provided to an employee, without losing the concession, is $30,000. The $30,000 capping threshold applies even if you did not employ the employee for the full FBT year. For example, if the total grossed-up value of the benefits you provide to an employee between October and March is $15,000, a rebate applies to all of the FBT payable for providing these benefits.
If the total grossed-up value of the fringe benefits provided to an individual employee is more than $30,000, a rebate can't be claimed for the FBT liability on the excess amount.
Use the following formula to calculate the rebate available to you:
0.48 | X | (gross tax - aggregate non-rebatable amount) | X | rebatable days in 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.
| The PBI, HPC and rebatable employers calculator will help you calculate the FBT liability for PBIs, HPCs and rebatable employers. The $30,000 capping threshold only has been considered in the calculator. You can also use the steps in tables 1 and 2 below to help you calculate the FBT payable. |
To calculate your FBT payable, you need to first calculate your gross tax (see table 1).
Table 1 - Calculating your gross tax
Follow the steps below to calculate your gross tax.
Step | Action | Result |
1 | Establish 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 |
2 | Identify the amount of GST-creditable fringe benefits included in the amount for step 1. | $xxx
|
3 | Identify those fringe benefits not taken into account in the calculation for amount
1
| $xxx
|
4 | Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits . | $xxx |
5 | Identify the GST-creditable fringe benefits included in step 4. | $xxx
|
6 | Identify those excluded fringe benefits that are not taken into account under amount
2
| $xxx
|
7 | Add amount 1 and amount 2
| Type 1 individual fringe benefits taxable amount |
8 | Use the following formula: Type 1 individual fringe benefits amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | Individual grossed-up type 1 fringe benefits taxable amount |
9 | Add amount 3 and amount 4
| Type 2 individual fringe benefits taxable amount |
10 | Use the following formula: Type 2 individual fringe benefits amount X
1
(that is, the result from step 9 x 1.8692) . | Individual grossed-up type 2 fringe benefits amount |
11 | For each employee add:
(that is, the result from step 8 plus the result from step 10) . | Individual fringe benefits taxable amount |
12 | Add together the individual fringe benefits taxable amount calculated for every employee
| Total fringe benefits taxable amount |
13 | Multiply the total fringe benefits taxable amount by the FBT rate
| Gross tax |
You need to then calculate your FBT rebate (see table 2, following).
Table 2 - Calculating your FBT rebate
Follow the steps below to calculate your FBT rebate.
| Do you provide any of the following excluded benefits?
If no :
If yes , start from step 1 in table 2 below. |
Although these excluded fringe benefits are included in the calculation of the amount of FBT to be paid by the employer, they are excluded from the calculation of the amount to be reported on the employee's payment summary and for the FBT rebate capping threshold of $30,000.
Step | Action | Result |
1 | Establish 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 |
2 | Identify 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
|
3 | Identify those fringe benefits not taken into account in the calculation for step
2
(This will be the same amount calculated in table 1, step 3). | $xxx
|
4 | Determine 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 6.3 . | $xxx |
5 | Identify the GST-creditable fringe benefits included in step 4. | $xxx
|
6 | Identify those excluded fringe benefits that are not taken into account under step
5
| $xxx
|
7 | Add amount 1 and amount 2
| Type 1 individual base non-rebatable amount |
8 | Use the following formula: Type 1 individual base non-rebatable amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | Individual grossed-up type 1 non-rebatable amount |
9 | Add amount 3 and amount 4
| Type 2 individual base non-rebatable amount |
10 | Use the following formula: Type 2 individual base non-rebatable amount X
1
(that is, the result from step 9 x 1.8692). | Individual grossed-up type 2 non-rebatable amount |
11 | For each employee add:
| The result is the individual grossed-up non-rebatable amount for the employee. |
12 | Subtract $30,000 from the individual grossed-up non-rebatable amount for each employee.
| If the individual grossed-up non-rebatable amount for an employee is equal to or less than $30,000, the amount calculated under this step is nil. |
13 | Add together the amounts calculated at step 12 for each employee. | $xxx |
14 | Multiply the total amount calculated under step 13 by the FBT rate. | The result is your aggregate non-rebatable amount for the FBT year. |
15 | Use this formula: 0.48 X (gross tax - aggregate non-rebatable amount) X
number of days in FBT year
That is: 0.48 X (table 1, step 13 minus table 2, step 14)
X rebatable days in year
| The result is your FBT rebate . |
You then need to calculate your FBT payable (see table 3, following).
Table 3 - Calculating your FBT payable
Use the following step to calculate your FBT payable.
Step | Action | Result |
1 | Gross tax - FBT rebate (that is, the result from table 1, step 13 minus the result from table 2, step 15). | 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 a rebatable employer from 31 October in an FBT year. | ||
Car fringe benefit | $7,700 | GST taxable supply with an entitlement to GST credits. |
Restaurant meals | $1,100 | Valued as expense payment. Excluded fringe benefit with an entitlement to GST credits. |
Reimbursement of school fees | $6,000 | Expense payment fringe benefit. GST-free supply with no entitlement to GST credits. |
Remote area rent reimbursement | $3,000 | Excluded fringe benefit for payment summary 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
Step | Action | Result |
1 | Establish the employee's individual fringe benefits amount. The individual fringe benefits amount is the value of all benefits other than excluded benefits. | The individual fringe benefits amount = Car fringe benefit + reimbursement of school fees $7,700
+
The individual fringe benefits amount is $13,700. |
2 | Identify the amount of GST-creditable fringe benefits included in the amount for step 1. | $7,700
In this example, the employer is entitled to GST credits for the car fringe benefit. |
3 | Identify those fringe benefits not taken into account in the calculation for amount 1
| $13,700
-
|
4 | Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits . | $1,100 +
The excluded fringe benefits are the restaurant meals and the remote area rent reimbursement. |
5 | Identify the GST-creditable fringe benefits included in step 4. | $1,100
In this example, the employer is entitled to GST credits on the restaurant meals. |
6 | Identify those excluded fringe benefits that are not taken into account under amount
2
| $4,100
-
|
7 | Add amount 1 and amount 2
| $7,700
+
The type 1 individual fringe benefits taxable amount is $8,800. |
8 | Use the following formula: Type 1 individual fringe benefits amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | $8,800
x
The individual grossed-up type 1 fringe benefits taxable amount is $18,169 . |
9 | Add amount 3 and amount 4
| $6,000
+
The type 2 individual fringe benefits taxable amount is $9,000 . |
10 | Use the following formula: Type 2 individual fringe benefits amount X
1
(that is, the result from step 9 x 1.8692). | $9,000
x
The individual grossed-up type 2 fringe benefits amount is $16,822 . |
11 | For each employee add:
(that is, the result from step 8 plus the result from step 10). | $18,169
+
The individual fringe benefits taxable amount is $34,991 . |
12 | Add together the individual fringe benefits taxable amount calculated for every employee
| There is only one employee, so the total fringe benefits taxable amount is $34,991 . |
13 | Multiply the total fringe benefits taxable amount by the FBT rate
| $34,991
x
The gross tax is $16,270.81 . |
The rebatable organisation then needs to then calculate their FBT rebate (see table 2).
Table 2 - Calculating your FBT rebate
Step | Action | Result |
1 | Establish 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). | $13,700 (From table
1,
|
2 | Identify 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). | $7,700
(From table
1,
|
3 | Identify those fringe benefits not taken into account in the calculation for step 2
(This will be the same amount calculated in table 1, step 3). | $6,000
(From table
1,
|
4 | Determine the employee's share of the benefits that would be excluded fringe benefits. These excluded fringe benefits are listed in Reportable fringe benefits . Benefits specifically not included in this calculation are:
| $3,000 (The $3,000 is the remote area rent reimbursement. The restaurant meals of $1,100 are specifically not included here). |
5 | Identify the GST-creditable fringe benefits included in step 4. | $0
(The employer is not entitled to GST credits for the remote area rent reimbursement). |
6 | Identify those excluded fringe benefits that are not taken into account under step
5
| $3,000
- $0
|
7 | Add amount 1 and amount 2
| $7,700
+ $0
The type 1 individual base non-rebatable amount is $7,700 . |
8 | Use the following formula: Type 1 individual base non-rebatable amount X
FBT rate + GST rate
(that is, the result from step 7 x 2.0647). | $7,700
x 2.0647
The individual grossed-up type 1 non-rebatable amount is $15,898 . |
9 | Add amount 3 and amount 4
| $6,000
+ $3,000
The type 2 individual base non-rebatable amount is $9,000 . |
10 | Use the following formula: Type 2 individual base non-rebatable amount X
1
(that is, the result from step 9 x 1.8692). | $9,000
x 1.8692
The individual grossed-up type 2 non-rebatable amount is $16,822 . |
11 | For each employee add:
| $15,898
+ $16,822
The individual grossed-up non-rebatable amount is $32,720 . |
12 | Subtract $30,000 from the individual grossed-up non-rebatable amount for each employee. | $32,720
-$30,000
|
13 | Add together the amounts calculated at step 12 for each employee. | As there is only one employee, this amount is $2,720 . |
14 | Multiply the total amount calculated under step 13 by the FBT rate. | $2,720
x 0.465
The aggregate non-rebatable amount is $1,264.80 . |
15 | Use this formula: 0.48 X (gross tax - aggregate non-rebatable
X
number of days in FBT year
That is: 0.48 X (table 1, step 13 - table 2, step 14) X rebatable days in year
| 0.48 X ($16,270.81 - $1,264.80) X 183
=0.48 X $15,006.01 X 1 = $7,202.88 The FBT rebate is $7,202.88 . |
The rebatable organisation then needs to calculate their FBT payable (see table 3).
Table 3 - Calculating your FBT payable
Step | Action | Result |
1 | Gross tax - FBT rebate (that is, the result from table 1, step 13 minus the result from table 2, step 15). | $16,270.81 - $7,202.88
The FBT payable is $9,067.93 . |
6.7 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 .
| Before 1 April 2007, the fringe benefits reporting exclusion threshold was $1,000. |
More information
- For more on
- charities, refer to Income tax guide for non-profit organisations
- PBIs and HPCs, refer to GiftPack
- applying for endorsement, refer to Endorsement application packs
- reportable fringe benefits, refer to Reportable fringe benefits - facts for employees .
- Taxation Ruling TR 2003/5 - Income tax and fringe benefits tax: public benevolent institutions .
Changes and updates
The electronic version of the guide is reviewed on a quarterly basis. The following tables detail any major changes and updates made to this chapter at each review.
2010 calendar year
Quarter 1
Section | Changes and updates |
6.3 Benefits excluded from FBT capping measures | Updated 'Meal entertainment' information for clarity. |
6.6 Calculating the FBT rebate | Updated information about total days in the year. Updated example. |
6.7 Reportable fringe benefits | Updated information to reflect change in the reporting exclusion threshold. |
Quarter 2
Section | Changes and updates |
6.6 Calculating the FBT rebate | Under 'Table 2 - Calculating your FBT rebate', reworded opening text for clarity. |
6.6 Calculating the FBT rebate | Under 'Example - FBT rebate capping threshold exceeded' / 'Table 2 - Calculating your FBT rebate', reworded opening text for clarity. |
Quarter 3
Section | Changes and updates |
Chapter title | Changed from 'Non-profit organisations and FBT' to 'Non-profit organisations and fringe benefits tax'. |
Last Modified: Friday, 24 December 2010
ATO references:
NO NAT 1054
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