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.