myIR, payments and more
Fringe benefit tax rates
There are three different fringe benefit tax (FBT) rates. Choose the one that best suits your business and apply it to the taxable value of your fringe benefits.
What's on this page
Consider your situation when deciding which FBT rate to apply to the fringe benefits you provide. There are pros and cons to each of the three options and we discuss these below.
The single rate is 49.25%. This is the highest FBT rate.
You apply this rate to all fringe benefits provided.
Using the single rate for all your FBT returns is the easiest option, but if any of your employees earn an annual income of less than $70,000, you'll end up overpaying. The alternate rate deals with this situation.
The short form alternate rate is:
- 49.25% (same as the single rate) for all attributed benefits, and non-attributed benefits provided to major shareholder-employees
- 42.86% for non-attributed benefits.
You apply the appropriate rate to all fringe benefits provided.
The short form alternate rate can be a good option if you have employees earning less than $70,000 or if you provide a number of non-attributed benefits.
A major shareholder-employee is a person who owns, controls or has the right to acquire 10% or more of the ordinary shares, voting rights or control of a close company, and is also an employee of that company.
Non-attributed benefits are pooled or shared fringe benefits that are not assigned to an individual employee. This option is useful when all employees have the same or similar rights to a particular benefit. For example, a work motor vehicle that everyone can use.
The full alternate rate only applies to attributed benefits.
If you choose the full alternate rate, you need to do a separate calculation for each employee. This can require more record keeping and a lengthier calculation process, but these demands may be offset by tax savings.
Our Fringe benefit tax alternate rate calculator can do the calculations for you, or you can follow these steps for each employee:
- Work out the employee’s annual net income by taking the tax payable for the year from the employee's gross annual salary or wage.
- Add the net income to the total taxable value of all fringe benefits attributed to the employee. This gives you the employee's fringe benefit inclusive cash remuneration (FBICR).
- Apply the FBT rates (below) to your FBICR. Call the result Total A.
- Deduct the tax payable for the year from Total A. This gives you the FBT to pay for that employee.
If you file quarterly returns, deduct all FBT paid for the employee in the previous three quarters. You only need to pay the net amount in the fourth quarter.
Full alternate FBT rates are:
- 11.73% for FBICR of $0 to $12,530
- 21.21% for FBICR of $12,531 to $40,580
- 42.86% for FBICR of $40,581 to $55,980
- 49.25% for FBICR of over $55,981
These rates are applied to each "layer" of the employee's FBICR to calculate Total A.
For example, a FBICR of $38,000 would give you a Total A of $6,871.94:
|$12,530 at 11.73%||$1,469.76|
|$25,470 at 21.21%||$5,402.18|
Consider your situation when deciding which FBT rate to apply to the fringe benefits you provide. Think about the:
- additional time and possible set-up costs to complete the alternate rate calculations
- impact of non-attributed benefits. If you provide a number of non-attributed benefits you should consider using the alternate rate calculation process
- amount your employees earn annually. Consider using the single rate if you have employees earning over $70,000; or one of the alternate rate calculations if you have employees earning less than $70,000.
If you file an annual return, you can choose any of the three FBT rates and change rates from year-to-year.
If you file quarterly, you can swap between FBT rates during the year. This can help you more accurately calculate your annual FBT. For example, you might choose to calculate FBT on all fringe benefits for the first three quarters at the single rate of 49.25%. Then use the short form alternate rate or full alternate rate in the fourth quarter. This option will "square up" your FBT for the year.
If you elect and pay FBT using the alternate rate in any of the first three quarters, you must complete the alternate rate calculation process in the fourth (final) quarter.
Once you’ve chosen a FBT tax rate, find out the next steps in the FBT return process.