Calculating payroll tax on fringe benefits
Fringe benefits are divided into Type 1 and Type 2 in the Fringe Benefits Tax Assessment Act 1986 (Cwlth) (FBT Act). The type of each fringe benefit depends on whether or not you can claim a GST input tax credit.
Payroll tax must be paid on the grossed-up value of fringe benefits.
Calculating the grossed-up value
To calculate the grossed-up value of fringe benefits, add the Type 1 and Type 2 total amounts (before grossing up) used in your fringe benefits tax return, and then multiply this total by the Type 2 gross-up factor.
The formula is:
(Type 1 aggregate amount + Type 2 aggregate amount) × Type 2 gross-up factor = Grossed-up value
Any amended fringe benefit tax assessments you receive from the Australian Taxation Office will affect your payroll tax liability.
The taxable wage value of non-cash benefits (other than fringe benefits) is the higher of the value:
- we determine for these benefits
- agreed between you and the employee
- determined by you.
If the benefit under the FBT Act is nil, the value for payroll tax is also nil.