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.