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Alerts

From 1 March 2015, the temporary budget repair levy of 2% will impact the:

  • Fringe Benefits Tax (“FBT”) rate;
  • Gross-up rates; and
  • Not-for-profit concessional caps.

What does this mean for employers?

FBT is an employer tax. The tax rate increase of 2% means that employers’ staff costs will also increase by 2%, if the benefits provided are not structured correctly. Given it is the start of the FBT year, we recommend:

  • Understanding the ‘real’ cost of providing the fringe benefit
  • Revising the benefits provided to employees to determine whether the tax is on charged to the employee
  • Considering why the fringe benefit is being provided and whether there is a suitable and cost-effective alternative.

The relevant rates for the year ended 31 March 2016

Taxable and gross-up rates

FBT Rate 49%
Type 1 gross-up rate 2.1463
Type 2 gross-up rate 1.9608

 

Reportable fringe benefits

Taxable value Exceeds $2,000
Gross-up rate 1.9608
Grossed-up value $3,921

 

Capping of concessional FBT treatment for certain employers

Entity Gross amount ($) Maximum amount if no GST credits available ($) Maximum amount if GST credits available ($) 
Public benevolent institutions other than hospitals, health promotion charities and rebatable employers 31,177 15,900.14 14,525.93
Public and non-profit hospitals 17,667 9,010.09 8,231.37

 

 Next Steps

Please contact our tax team to learn how these changes could affect your 2016 business planning on (07) 3023 1300.