How FBT is calculated
Fringe Benefits Tax is paid by employers on certain benefits given to staff instead of, or on top of, salary. The calculation has three steps. First, work out the taxable value of the benefit, usually its GST-inclusive cost. Second, gross it up to the pre-tax salary an employee would have needed to buy it themselves. Third, multiply the grossed-up value by the 47% FBT rate. The FBT year runs from 1 April to 31 March, so it is offset from the income tax year.
Type 1 and type 2 benefits
Benefits split into two pools based on GST. Type 1 benefits are ones you claimed a GST credit on, and they use the higher gross-up rate of 2.0802. Type 2 benefits have no GST credit, for example items that are GST-free or bought from a supplier that is not registered for GST, and they use the 1.8868 rate. You gross up each pool with its own rate, add the two grossed-up totals, then apply the 47% rate to the combined figure.
The reportable fringe benefits amount
If the taxable value of an employee’s benefits tops $2,000 in an FBT year, you report a grossed-up figure on their income statement. This reportable fringe benefits amount always uses the type 2 gross-up rate of 1.8868, even for type 1 benefits. It does not change the employee’s income tax, but it counts towards income tests for HELP/HECS repayments, the Medicare levy surcharge and family assistance payments.
What FBT applies to
Common fringe benefits include a company car available for private use, cheap loans, paying an employee’s private expenses, entertainment and living-away-from-home allowances. Some benefits are exempt or get concessional treatment, such as eligible electric vehicles, minor benefits under $300 and work-related portable electronic devices. This calculator gives the FBT on a benefit’s taxable value once you have worked that value out. For a car, the taxable value itself depends on the statutory or operating cost method, so use the ATO car calculator for that step first.
Frequently asked questions
How do you calculate FBT?
Work out the taxable value of the benefit, gross it up, then multiply by the 47% FBT rate. Grossing up converts the benefit back to the pre-tax salary an employee would have needed to buy it themselves. Use the type 1 gross-up rate of 2.0802 for benefits you claimed a GST credit on, or the type 2 rate of 1.8868 for benefits with no GST credit. So a $10,000 type 1 benefit grosses up to $20,802, and FBT is $20,802 × 47% = $9,777.
What is the FBT rate for the ATO?
The FBT rate is 47% for the FBT year ending 31 March 2026 and 31 March 2027. It matches the top marginal income tax rate of 45% plus the 2% Medicare levy, so a benefit costs the employer about the same as paying enough extra salary for a top-rate employee to buy it after tax. The rate has been 47% since the 2017-18 FBT year.
What is the difference between type 1 and type 2 fringe benefits?
The split is about GST. Type 1 benefits are ones where the employer was entitled to a GST credit, so they use the higher gross-up rate of 2.0802. Type 2 benefits have no GST credit, for example benefits from a supplier who is not registered for GST or GST-free items, and use the 1.8868 rate. You apply the two rates to the two pools of benefits separately, then add the grossed-up totals before applying the 47% FBT rate.
What is the FBT gross-up rate?
There are two. The type 1 gross-up rate is 2.0802 and applies to GST-creditable benefits. The type 2 gross-up rate is 1.8868 and applies to benefits with no GST credit. The reportable fringe benefits amount that appears on an employee's income statement is always calculated using the type 2 rate of 1.8868, whichever type the benefit was.
What is the FBT limit per employee?
There is no general dollar limit on fringe benefits, but an employee's reportable fringe benefits amount is recorded on their income statement once the taxable value of their benefits for the FBT year is more than $2,000. Separately, staff at FBT-exempt employers such as hospitals and charities have capped concessions of roughly $9,010 or $15,900 of grossed-up value. Our salary packaging calculator covers those caps.
When is the FBT year?
The FBT year runs from 1 April to 31 March, which is different to the 1 July to 30 June income tax year. FBT returns for the year ending 31 March are generally due in May, or later if you lodge through a tax agent. You pay FBT on the benefits you provided across that April-to-March period.
General information, not tax or financial advice. FBT rules, exemptions and rates change, confirm your obligations with the ATO or a registered tax agent.
