If you provide certain fringe benefits to your employee(s), you must include them in the wages you declare for payroll tax purposes. These are fringe benefits within the meaning of the Fringe Benefits Tax Assessment Act 1986 (FBTA Act) and typically include providing a car, paying expenses such as housing costs or school fees and paying for meals and entertainment.
Any exempt fringe benefits or fringe benefits with a nil value are excluded for payroll tax purposes. The living away from home allowance is captured as a fringe benefit, and as such does not need to be declared separately.
The FBTA Act categorises fringe benefits into two types - Type 1 and Type 2. Type 2 fringe benefits attract a lower gross up figure for income tax purposes than Type 1 fringe benefits. This lower figure, called the type 2 gross up amount, is used for payroll tax purpose.
Declaring fringe benefits on your annual payroll tax reconciliation
The amount you need to declare on your annual reconciliation is the total of the type 1 and type 2 benefits, grossed up by the lower type 2 gross up rate.
If you have declared your actual fringe benefits on a month to month basis, you need to take those previously declared amounts and add in any fringe benefits provided in June, once again grossed up by the lower type 2 gross up rate.
If you have declared your fringe benefits using the alternative method, you need to declare the type 1 and type 2 benefits at question 14 of your FBT return immediately preceding the annual reconciliation, grossed up by the type 2 gross up rate.
If you have employees who receive fringe benefits in multiple states and territories, ensure you apportion the declaration of fringe benefits across those states and territories. For example, if 60 per cent of your total wages are paid in Victoria and 40 per cent are paid in South Australia, you would declare 60 per cent of your grossed up fringe benefits in Victoria and 40 per cent in South Australia.
Revenue ruling PTA-003v2 addresses the following matters in more detail:
- Calculating the value of fringe benefits for payroll tax purposes.
- Clarifying the treatment of fringe benefits with a nil taxable value and exempt benefits where such benefits also fall within another part of the definition of wages.
- Explaining the requirements of the alternative method of declaring fringe benefits.
- Explaining the method of calculating the Victorian component of fringe benefits when they are not readily identifiable.
- The adoption of Australian Taxation Office (ATO) fringe benefits tax rulings.
Note: The FBT year runs from 1 April to 31 March.
|FBT year||FBT rate||Type 2 gross-up rate|
|Ending 31 March 2019||47%||1.8868|
|Ending 31 March 2018||47%||1.8868|
|Ending 31 March 2017||49%||1.9608|