Why this occurs is as much a mystery to me as it is to you. What I will endeavour to do is assist you with summarising the three main reporting requirements for FBT being Group Certificates, Payroll Tax, and Workcover. Please note that these apply to Victoria as it is the state I operate in, so if you are in another state please refer to your local Office of State revenue for their definitions.
Below are the definitions that will assist you in completing any obligations that require Fringe Benefits to be reported on:
Gross Taxable Value – This is the value of the benefit given to the employee. If you provide a car to an employee, this is the value of the car provided for that period.
Taxable Amount – The idea of FBT is to levy a tax on the employer so that the benefit is taxed in a similar way to which the employee would have been taxed if they paid for that benefit personally. For instance, how much tax would the employee pay on wages they would need to earn in order to pay for that car? This is done by multiplying the Gross Taxable Value by either the Type 1 or Type 2 gross up rate (see below) to get the “before tax” value of wages that the employee would need to earn to pay for that benefit themselves.
Type 1 Gross Up Rate – This rate is applied to the Gross Taxable Value of benefits that the provider (employer) is eligible to claim GST credits on that benefit. Currently the Type 1 Gross Up Rate is 2.0647
Type 2 Gross Up Rate – This rate is applied to the Gross Taxable Value of benefits that the provider (employer) is not eligible to claim GST credits on that benefit. Currently the Type 2 Gross Up Rate is 1.8692
FBT – This stands for Fringe Benefits Tax. When we use this term, we are simply referring to the tax payable on Fringe Benefits.
Group Certificates/PAYG Payment Summary
If the Gross Taxable Value of an employee’s benefit is less than $2000, then you do not need to put it on their payment summary. If it is over $2000, then you must multiply the Gross Taxable Value by the Type 2 Gross Up Rate (regardless of whether or not the Type 1 rate applies for calculating FBT), and report this figure on the employees PAYG Payment Summary. For example, an employee with a Gross Taxable Value of $2001 will have $3740 on their PAYG Payment Summary.
Payroll Tax (Victoria only)
The figure to report for Payroll Tax is the Gross Taxable Value multiplied by the Type 2 Gross Up Rate (again, regardless of whether or not the Type 1 rate applies for calculating FBT). For example, an employer that has $10000 of Type 1 benefits, and $5000 of Type 2 benefits will simply multiply the total ($15000) by the Type 2 Gross Up Rate (1.8692), and report $28038.
Workcover (Victoria only)
For the 2010 year and previous, the Gross Taxable Value was the magic figure to include. However, this is being changed so that it is the Gross Taxable Value multiplied by the Type 2 Gross Up Rate so it is in line with Payroll Tax and PAYG Payment Summary. This change will be phased in over 5 years however, so for the 2011 to 2014 years, a smaller gross up rate will be used. For the 2011 year, an employer with $15,000 of Gross Taxable Value will report $17,608 to WorkCover.
Where are these figures on my FBT Return?
The Gross Taxable Value is the combined total of the two left-hand boxes of 13A and 13B on the FBT Return.
As mentioned before, this relates to Victoria only as each state will be different on the rate you use to calculate FBT for Workcover and Payroll Tax.
About Author Craig Ball
Craig Ball is a Charted Accountant at Bentley Partners with more than 7 years experience gained in mid tier firms in Brisbane, Sydney and Perth. He is passionate about tax and making sure that his clients receive the best available advice.