Posted on 22 March '16 by , under General News.
With the end of the fringe benefits tax (FBT) year fast approaching, business owners need to be aware of the FBT and gross up rates when preparing for their FBT return.
The FBT rate increased from 47 per cent to 49 per cent from 1 April 2015. The rate increase was due to the introduction of the Temporary Budget Repair Levy imposed on individuals for a two year period (1 April 2015 to 31 March 2017).
Consequently, the gross up rates were increased from 1 April 2015 to 2.1463 for Type 1 benefits (GST-creditable benefits), and 1.9608 for Type 2 benefits (no entitlements to a GST credit).
The FBT rate will return to 47 per cent from 1 April 2017, as a result of the discontinuation of the Temporary Budget Repair Levy. The gross up rates from 1 April 2017 will be 2.0802 for Type 1 benefits and 1.8868 for Type 2 benefits.
Whether the benefits provided to the employee are type 1 or type 2, only the lower gross-up rate is used for reporting on employees’ payment summaries.