Fringe benefits tax - a guide for employers
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Chapter 6 - Non-profit organisations and FBT
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. 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. As of 3 December 2012, charities that want to access FBT concessions must be registered with the Australian Charities and Not-for-profits Commission (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 determine if workers are employees or independent contractors (QC33190).
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.
6.2 FBT concessions and endorsement
The FBT concessions which specifically apply when the employer is a non-profit organisation are:
- FBT exemption
- FBT rebate
- certain benefits provided by registered religious institutions and non-profit companies
- car parking
- remote area concessions.
For these concessions to apply to a non-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).
Where an entity was endorsed for the operation of a public benevolent institution as at 2 December 2012, that operation is treated by the ACNC as an entity separate to the main entity and as a Registered Public Benevolent Institution, from 3 December 2012.
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 as a tax concession charity or income tax exempt fund (NAT 10651)
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 (other than hospitals) endorsed by the ATO
- Registered health promotion charities endorsed by the ATO
- Public and non-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 outlines the capping thresholds. Note the special thresholds applicable to the 2016 and 2017 FBT years.
Organisation | Capping threshold | Capping threshold - FBT year ending 31 March 2016 and 2017 |
Registered public benevolent and health promotion charities | $30,000 per employee | $31,177 per employee |
Public and non-profit hospitals and public ambulance services | $17,000 per employee | $17,667 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 hospital, the hospital capping threshold applies. The organisation cannot choose the capping threshold applicable to Registered Public Benevolent Institutions.
These organisations who provide certain entertainment benefits under salary packing arrangements may be eligible for a separate exemption cap for the FBT year ending 31 March 2017 and subsequent years. Refer to section 6.5 Separate cap for salary packaged entertainment benefit for further information.
FBT exemptions are also available to Registered religious institutions and non-profit companies. These exemptions are not subject to capping. For more information see 6.6 Concessions available for religious institutions and 20.5 Religious and non-profit organisation exemptions.
For information about:
- Hospitals, see Health organisations (QC 46316)
- Registered Public benevolent institutions (other than hospitals), see Is your organisation a public benevolent institution? (QC 16714).
- For information about Registered Health promotion charities, see Is your organisation a health promotion charity? (QC 16713)
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, non-profit organisations. Organisations that may qualify for the FBT rebate include:
- Registered Charities who are an institution; who are not established under a government law and who are endorsed as a charitable institution for these purposes;
- certain educational, 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
- non-profit organisations established to promote the development of the agricultural, pastoral, horticultural, viticultural, aquacultural, fishing, manufacturing or industrial resources of Australia.
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 Endorsement to access charity tax concessions.
Other non-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.
Table 1: FBT rebate percentage and capping threshold
FBT year ending | Rebate percentage | Capping threshold |
|---|---|---|
31 March 2015 (and prior years) | 48% | $30,000 |
31 March 2016 and 31 March 2017 | 49% | $31,177 |
31 March 2018 | 47% | $30,000 |
Note: From 1 April 2015, 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 who provide certain entertainment benefits under salary packaging arrangements may access a separate capping threshold for the FBT year ending 31 March 2017 and subsequent years. Refer to section 6.5 Separate cap for salary packaged entertainment benefits for further information.
Temporary entitlement to the FBT rebate - some government bodies and charitable funds
Transitional changes to the FBT law as a result of the introduction of the ACNC had meant that Registered Charities that are institutions of the Commonwealth, a State or a Territory and also Registered Charities that are charitable funds may have been eligible for the FBT rebate for the period 3 December 2012 to 31 March 2013.
Some entities may also have been eligible for the FBT rebate for the period 1 April 2013 to 31 March 2014.
The table below summarises a Registered Charity's entitlement to the FBT rebate under these transitional changes to the FBT law.
If.. | Then.. |
|---|---|
Your charity is not registered with the ACNC | It is not entitled to the FBT rebate |
Your charity is a Registered Public Benevolent Institution or Registered Health Promotion Charity | It is not entitled to the FBT rebate |
Your Registered Charity is not endorsed to access the FBT rebate tax concession and is a charitable institution | It is not entitled to the FBT rebate |
Your Registered Charity is not endorsed to access the FBT rebate tax concession and is not an institution |
|
Your Registered Charity is endorsed to access the FBT rebate tax concession, commencing from a date of endorsement which is before 30 June 2013. |
|
Your Registered Charity is endorsed to access the FBT rebate tax concession commencing from a date of endorsement which is on or after 30 June 2013 | It is entitled to the FBT rebate from the commencement date of the endorsement, provided all of the conditions are met. |
Conditions
A Registered Charity endorsed before or from 30 June 2013 must satisfy the following conditions to be entitled to the FBT rebate apply from the FBT year commencing 1 April 2014:
- be a Registered Charity
- be endorsed for the income tax exemption
- be an institution
- not be a Registered Public Benevolent Institution
- not be a Registered Health Promotion Charity
- not be an institution of the Commonwealth, a State or a Territory
- endorsed for the FBT rebate by satisfying all of the above 6 conditions
Example: A university is a charitable institution that has been endorsed as income tax exempt since 2008. On 3 December 2012, the university is deemed to be registered with the ACNC.
The university is an institution of the Commonwealth, a State or a Territory. On 30 September 2013, the university applied for endorsement for the FBT rebate, requesting that it be effective from 3 December 2012, and it was granted endorsement effective from that date.
The university:
- is a charity that is registered with the ACNC that is it is a Registered Charity
- is not a Registered Public Benevolent Institution or a Registered Health Promotion Charity
- is endorsed to access the FBT rebate with effect before 30 June 2013.
As a result, the university is eligible for the FBT rebate for the period:
- 3 December 2012 to 31 March 2013; and
- 1 April 2013 to 31 March 2014.
The university is not eligible for the FBT rebate from 1 April 2014 because it is an institution of the Commonwealth, a State or a Territory. The Commissioner revokes the university's endorsement from that date.
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 section 6.3 FBT exemption - subject to capping for information about the exemption and 6.4 FBT rebate 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 Fringe benefits tax and entertainment and Chapter 15 Tax-exempt body entertainment fringe benefits for more information about what is entertainment.
Separate cap
Salary packaged entertainment provided previously excluded are now included in the capping thresholds referred to in sections 6.3 FBT exemption - subject to cappin and 6.4 FBT rebate. 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 either:
- provided on or after the FBT year ending 31 March 2016, and
- provided under a salary packaging arrangement.
See 6.9 Calculating FBT - Benefits excluded from the FBT capping measures for more information.
6.6 Concessions available for religious institutions
Your organisation is a religious institution if it is both:
- non-profit
- an Institution to advance or promote religious purposes.
For more information refer to Religious institutions: access to tax concessions (QC 35223).
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 6.4 FBT rebate.
Other concessions
Registered Religious Institutions may also be eligible for FBT concessions for benefits they provide to:
- religious practitioners
- live-in carers
- domestic employees.
The 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 purpose that is the advancement of religion.
For more information refer to 20.5 Religious and non-profit organisation exemptions and also Taxation Ruling TR 92/17 Income tax and fringe benefits tax: exemptions for 'religious institutions'.
6.7 Non-profit companies and live-in residential carers
The following non-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 non-profit company that is not a charity.
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 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 its 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 members can qualify as a non-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 non-profit hospital
- a hospital carried on by a non-profit society or a non-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 10.8 Exempt housing benefits
- remote area residential fuel reduction explained at 19.2 Remote area reductions
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
Car parking fringe benefits when provided by Registered Public Benevolent Institutions, Registered Health Promotion Charities, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
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 Registered Public Benevolent Institutions, Registered Health Promotion Charities, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
However, benefits provided on or after 1 April 2016 under a salary packaging arrangement are no longer excluded and are subject to a separate cap. Refer to section 6.5 - Separate cap for salary packaged entertainment benefits.
Entertainment facility leasing expenses
Entertainment facility leasing expenses when incurred by Registered Public Benevolent Institutions, Registered Health Promotion Charities, public hospitals, non-profit hospitals, public ambulance services and rebatable employers.
However, benefits provided on or after 1 April 2016 under a salary packaging arrangement are no longer excluded and are subject to a separate cap. Refer to section 6.5 - Separate cap for salary packaged entertainment benefits.
6.10 Calculating the FBT exemption
Where your organisation (Registered Health Promotion Charity or Registered Public Benevolent Institution or public or non-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.
Table: FBT and gross-up rates
FBT year | FBT rate | Type 1 gross-up rate | Type 2 gross-up rate |
|---|---|---|---|
Ending 31 March 2014 (and prior years) | 46.5% | 2.0647 | 1.8692 |
Ending 31 March 2015 | 47% | 2.0802 | 1.8868 |
Ending 31 March 2016 and 31 March 2017 | 49% | 2.1463 | 1.9608 |
Ending 31 March 2018 | 47% | 2.0802 | 1.8868 |
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 5.2 Reportable fringe benefits. | $xxx |
| 2 | Identify the amount of GST-creditable fringe benefits included in the amount for step 1. | $xxx
(Amount 1) |
| 3 | Identify 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) |
| 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
5.2
Reportable fringe benefits.
Excluded benefits specifically not to be included in this calculation are listed in section 6.9. | $xxx |
| 5 | Identify the GST-creditable fringe benefits included in step 4. | $xxx
(Amount 2) |
| 6 | Identify 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) |
| 7 | Add 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 |
| 8 | Use the following formula:
Type 1 individual base non-exempt amount
(that is, the result from step 7 multiplied by type 1 gross-up rate). | Individual grossed-up type 1 non-exempt amount |
| 9 | Add 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 |
| 10 | Use the following formula:
Type 2 individual base non-exempt amount
(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.
If.. | Then.. |
|---|---|
| follow the steps in Table 2a. |
| follow the steps in Table 2a. |
| follow the steps in Table 2b. |
Table 2a - Calculating your FBT payable
- provided benefits on or before 31 March 2016; or
- did not provide salary packaged entertainment benefits
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. Refer to 6.3 FBT exemption - subject to capping 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. |
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 | The result is your FBT payable. |
Table 2b
Use this table if you:
- provided benefits on or after 1 April 2016; and
- provided salary packaged entertainment benefits
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. Refer to 6.3 FBT exemption - subject to capping for the appropriate capping threshold. | $XXXX 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. |
3 | From 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 | $XXXX GST-creditable salary packaged entertainment benefits |
4 | Use the following formula: Type 1 individual base non-exempt amount
(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 |
5 | From 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. | $XXXX Non-GST creditable salary packaged entertainment benefits |
6 | Use the following formula: Non-GST creditable salary packaged entertainment benefits
(that is, the result from step 5 multiplied by the type 2 gross-up rate). | Grossed-up non-GST creditable salary packaged entertainment benefits |
7 | Add 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 |
8 | Subtract from the amount calculated at Step 2 the lesser of:
(that is, the result from step 2 minus $5,000 or the result from step 2 minus the result from step 7). | $XXXX If the result is less than $0, include $0 here. |
9 | Add together all the amounts calculated under step 8 for each employee. | The total is your aggregate non-exempt amount. |
10 | Multiply 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 2017: | ||
A car fringe benefit | $7,700 | GST taxable supply with an entitlement to GST credits. |
Salary packaged restaurant meals | $3,300 | Valued as expense payment benefits. Exempt benefits under section 57A with no 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 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
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 + salary packaged restaurant meals + reimbursement of school fees. $7,700 + $3,300 + $6,000
The individual fringe benefits amount is $17,000. |
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
| $17,000 - $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 5.2 Reportable fringe benefits. 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. |
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
(that is, the result from step 7 multiplied by type 1 gross-up rate). | $7,700 x 2.1463
The individual grossed-up type 1 non-exempt amount is $16,527. |
9 | Add amount 3 and amount 4
| $9,300 + $3,000
The type 2 individual base non-exempt amount is $12,300. |
10 | Use the following formula: Type 2 individual base non-exempt amount
(that is, the result from step 9 multiplied by type 2 gross-up rate). | $12,300 x 1.9608
The individual grossed-up type 2 non-exempt amount is $24,118. |
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 your FBT payable
Use this table as the Registered Health promotion Charity:
- provided benefits on or after 1 April 2016; and
- provided salary packaged entertainment benefits.
Step | Action | Result |
|---|---|---|
1 | For each employee add :
| $16,527 + $24,118 = $40,645 The individual grossed-up non-exempt amount is $40,645. |
2 | Subtract 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 2017 for Registered HPC is $31,177. | $40,645 - $31,177 = $9,468 |
3 | From 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. |
4 | Use the following formula: Type 1 individual base non-exempt amount
(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. |
5 | From 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 |
6 | Use the following formula: Non-GST creditable salary packaged entertainment benefits
(that is, the result from step 5 multiplied by type 2 gross-up rate). | $3,300 x 1.9608 = $6,471 (rounded to the nearest dollar) The grossed-up non-GST creditable salary packaged entertainment benefits is $6,471. |
7 | Add 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 + $6,471 =$6,471 The grossed-up salary packaged entertainment benefits is $6,471. |
8 | Subtract from the amount calculated at Step 2 the lesser of:
(that is, the result from step 2 minus $5,000 or the result from step 2 minus the result from step 7). | $9,468 - $5,000 = $4,468 |
9 | Add 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 $4,468. |
10 | Multiply the result in step 9 by the FBT rate | $4,468 x 0.49 = $2,189.32 The FBT payable is $2,189.32. |
6.11 Calculating the FBT rebate
Use the following formula to calculate the rebate available to you:
FBT rebate percentage | X | (gross tax - aggregate non-rebatable amount) | X |
|
FBT rebate percentage is the FBT rate for the relevant FBT year from 1 April 2015.
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-rebatableamount 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 rate | Type 2 gross-up rate | FBT rebate percentage | FBT rebate cap | Salary packaged meal entertainment and entertainment facility leasing cap |
|---|---|---|---|---|---|---|
31 March 2014 | 46.5% | 2.0647 | 1.8692 | 48% | $30,000 | Not applicable |
31 March 2015 | 47% | 2.0802 | 1.8868 | 48% | $30,000 | Not applicable |
31 March 2016 and 31 March 2017 | 49% | 2.1463 | 1.9608 | 49% | $31,177 | $5,000 |
31 March 2018 | 47% | 2.0802 | 1.8868 | 47% | $30,000 | $5,000 |
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 (Amount 1) |
3 | Identify 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) |
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 (Amount 2) |
6 | Identify 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) |
7 | Add 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 |
8 | Use the following formula: Type 1 individual fringe benefits amount
(that is, the result from step 7 multiplied by type 1 gross-up rate). | Individual grossed-up type 1 fringe benefits taxable amount |
9 | Add 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 |
10 | Use the following formula: Type 2 individual fringe benefits amount
(that is, the result from step 9 x type 2 gross-up rate). | 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 (that is, the result from step 11 for every employee). | Total fringe benefits taxable amount |
13 | Multiply 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).
| If. . | Then. . |
|---|---|
You do not provide any of the following benefits:
|
|
You do provide any of the following benefits:
| Start from Step 1 in Table 2 below. |
Table 2 - Calculating your FBT rebate
Follow the steps below to calculate 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. 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 (Amount 1) |
3 | Identify 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) |
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 6.9. | $xxx |
5 | Identify the GST-creditable fringe benefits included in step 4. | $xxx (Amount 2) |
6 | Identify 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) |
7 | Add 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 |
8 | Use the following formula: Type 1 individual base non-rebatable amount
(that is, the result from step 7 multiplied by type 1 gross-up rate). | Individual grossed-up type 1 non-rebatable amount |
9 | Add 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 |
10 | Use the following formula: Type 2 individual base non-rebatable amount
(that is, the result from step 9 multiplied by type 2 gross-up rate). | 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 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.
If. . | Then. . |
you are calculating the FBT payable for the FBT year ended 31 March 2016 or earlier years | follow the steps in Table 2a. |
| follow the steps in Table 2a. |
| follow the steps in Table 2b. |
Table 2a - Calculating the FBT rebate continued
Use this table if you:
- provided benefits on or before 31 March 2016; or
- did not provide salary packaged entertainment benefits on or after 1 April 2016
1 | Add together the amounts calculated at Table 2, step 12 for each employee. | $xxx |
2 | Multiply the total amount calculated under step 1 by the FBT rate. | The result is your aggregate non-rebatable amount for the FBT year. |
3 | Use this formula: FBT rebate percentage
total days in FBT year That is: FBT rebate percentage
| The result is your FBT rebate. |
Table 2b - Calculating the FBT rebate continued
Use this table if you:
- provide salary packaged entertainment benefits on or after 1 April 2016
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.
Step | Action | Result |
1 | Determine 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 |
2 | Determine 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 |
3 | Determine 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. |
4 | Gross up the GST creditable salary packaged entertainment benefits using the following formula: GST creditable salary packaged entertainment benefits
(That is, the result from step 2 multiplied by type 1 gross-up amount). | Individual grossed-up GST creditable salary packaged entertainment benefits amount. |
5 | Gross up the non-GST creditable salary packaged entertainment benefits using the following formula Non-GST creditable salary packaged entertainment benefits
(that is, the result from step 3 multiplied by type 2 gross-up rate). | Individual grossed-up non-GST creditable salary packaged entertainment benefits. |
6 | Add 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 |
7 | Subtract from the amount calculated at Table 2, Step 12 the lesser of:
(but not below nil) | $XXXX Use nil if the result is less than $0. |
8 | Add together the amounts calculated at step 7 for each employee. | $XXXX |
9 | Multiply the amount calculated under step 8 by the FBT rate. | The result is your aggregate non-rebatable amount for the FBT year. |
10 | Use the following formula: FBT rebate percentage
That is: FBT rebate percentage
| 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 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 2016 in the FBT year ending 31 March 2017.
Car fringe benefit | $7,700 | GST taxable supply with an entitlement to GST credits. |
Salary packaged restaurant meals | $3,300 | Valued as expense payment and there is 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. | 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. |
2 | Identify 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. |
3 | Identify 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) |
4 | Determine 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. |
5 | Identify 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. |
6 | Identify 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) |
7 | Add 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. |
8 | Use the following formula: Type 1 individual fringe benefits amount
(that is, the result from step 7 multiplied by 2.1463). | $11,000 x 2.1463 = $23,609 (rounded to the nearest dollar) The individual grossed-up type 1 fringe benefits taxable amount is $23,609. |
9 | Add 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. |
10 | Use the following formula: Type 2 individual fringe benefits amount
(that is, the result from step 9 multiplied by 1.9608). | $9,000 x 1.9608 = $17,647 (rounded to the nearest dollar) The individual grossed-up type 2 fringe benefits amount is $17,647. |
11 | For each employee add:
(that is, the result from step 8 plus the result from step 10). | $23,609 + $17,647 = $41,256 The individual fringe benefits taxable amount is $41,256. |
12 | Add 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. |
13 | Multiply the total fringe benefits taxable amount by the FBT rate (that is, the result from step 12 multiplied by 49%). | $41,256 x 0.49 = $20,215.44 The gross tax is $20,215.44. |
The employer 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). | $17,000 (From table 1, step 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). | $11,000 (Amount 1) (From table 1, step 2) |
3 | Identify 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) |
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 6.8 | $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). |
5 | Identify 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). |
6 | Identify 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) |
7 | Add 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. |
8 | Use the following formula: Type 1 individual base non-rebatable amount
(that is, the result from step 7 multiplied by 2.1463). | $11,000 x 2.1463 = $23,609 (rounded to nearest dollar) The individual grossed-up type 1 non-rebatable amount is $23,609. |
9 | Add 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. |
10 | Use the following formula: Type 2 individual base non-rebatable amount
(that is, the result from step 9 multiplied by 1.9608). | $9,000 x 1.9608 = $17,647 (rounded to the nearest dollar) The individual grossed-up type 2 non-rebatable amount is $17,647. |
11 | For each employee add:
| $23,609 + $17,647 = $41,256 The individual grossed-up non-rebatable amount is $41,256. |
12 | Subtract $31,177 from the individual grossed-up non-rebatable amount for each employee. | $41,256 -$31,177 = $10,079 |
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 on or after 1 April 2016.
Step | Action | Result |
1 | Determine 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. |
2 | Determine 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. |
3 | Determine 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. |
4 | Gross up the GST creditable salary packaged entertainment benefits using the following formula:
GST creditable salary packaged entertainment benefits
(that is, the result from step 2 multiplied by type 1 gross-up amount). | $3,300 x 2.1463 =$7,082.79 The Individual grossed-up GST creditable salary packaged entertainment benefits amount is $7,082.79. |
5 | Gross up the non-GST creditable salary packaged entertainment benefits using the following formula
Non-GST creditable salary packaged entertainment benefits
(that is, the result from step 3 multiplied by type 2 gross-up rate). | $0 x 1.9608 =$0 The Individual grossed-up non-GST creditable salary packaged entertainment benefits amount is $0. |
6 | Add 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). | $7,082.79 + $0 =$7,082.79 The Individual grossed-up salary packaged entertainment benefits is $7,082.79. |
7 | Subtract from the amount calculated at Table 2, Step 12 the lesser of:
| $10,079 - $5,000 =$5,079 |
8 | Add together the amounts calculated at step 7 for each employee. | There is only one employee, so this amount is $5,079. |
9 | Multiply the amount calculated under step 8 by the FBT rate. | $5,079 x 0.49 =$2,488.71 The aggregate non-rebatable amount is $2,488.71. |
10 | Use the following formula: FBT rebate percentage X (gross tax - aggregate non-rebatable amount) X number of days in FBT year you were a rebatable employer total days in FBT year That is: FBT rebate percentage X (table 1, step 13 minus table 2b, step 9 X rebatable days in year total days in year | 0.49 x ($20,215.44 - $2,488.71) x 152/365 0.49 x $17,726.73 x 152/365 =$3,617.22 The FBT rebate is $3,617.22. |
The employer then needs to calculate their 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 2b, step 10). | $20,215.44 - $3,617.22 =$16,598.22 The FBT payable is $16,598.22. |
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. Meal entertainment or entertainment facility leasing benefits provided under a salary packaging arrangement on or after 1 April 2016 are no longer excluded from the reporting requirements.
More information
- For more on:
- charities and endorsement, refer to Tax concession charity endorsement
- applying for endorsement, refer to Application for endorsement as a tax concession charity or income tax exempt fund
- 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 .
- 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
- Goods and Services Tax Ruling GSTR 2001/3 - Goods and Services Tax: GST and how it applies to supplies of fringe benefits
Changes and updates
The electronic version of the guide is reviewed on a regular basis. The following changes and updates have been made to this chapter.
| Date | Update |
|---|---|
August 2016 | Revised to reflect changes to salary packaged entertainment. |
December 2013 | Revised to reflect new ACNC measures. |
ATO references:
NO Fringe benefits tax - a guide for employers
| Date: | Version: | ||
| 30 March 1997 | Original document | ||
| 13 December 2013 | Updated document | ||
| 1 July 2014 | Updated document | ||
| 7 December 2016 | Updated document | ||
| 22 May 2017 | Updated document | ||
| 11 July 2017 | Updated document | ||
| 17 August 2017 | Updated document | ||
| 4 September 2017 | Updated document | ||
| You are here | 11 April 2018 | Updated document | |
| 9 June 2018 | Updated document | ||
| 13 July 2018 | Updated document | ||
| 13 February 2019 | Updated document | ||
| 5 April 2019 | Updated document | ||
| 2 May 2019 | Updated document | ||
| 3 June 2019 | Updated document | ||
| 19 August 2019 | Updated document | ||
| 29 January 2020 | Updated document | ||
| 24 June 2020 | Updated document | ||
| 8 December 2020 | Updated document | ||
| 1 July 2021 | Updated document | ||
| 23 September 2022 | Updated document | ||
| 8 November 2023 | Updated document | ||
| 29 May 2024 | Current document | ||
| Chapters 5 and 20 have been updated. See the Changes and updates sections in the relevant chapters for details. | |||
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