Coronavirus (COVID-19) update: We are currently updating information following recent Queensland and Australian Government announcements. Find assistance and support for coronavirus affected businesses and industries.

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.