{"id":269650,"date":"2024-07-08T15:48:17","date_gmt":"2024-07-08T03:48:17","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?p=269650"},"modified":"2025-06-27T16:01:44","modified_gmt":"2025-06-27T04:01:44","slug":"how-to-calculate-fbt","status":"publish","type":"sbh","link":"https:\/\/www.reckon.com\/au\/small-business-resources\/tax\/how-to-calculate-fbt\/","title":{"rendered":"How to calculate FBT"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” locked=”off” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n

To calculate fringe benefits tax (FBT), you must use the grossed-up rate applicable and the maximum tax threshold of 45% plus the medicare levy of 2%. Here is the formula:<\/p>\n

Benefit taxable amount x grossed up rate x 47%<\/strong><\/em><\/p>\n

Knowing your fringe benefit tax before<\/a> calculating it is important, so the best action is to seek professional taxation advice from your accountant or financial advisor<\/a>.<\/p>\n

That said, let’s look at the steps and use a gym membership as an example of a GST-inclusive benefit and an employee’s tuition fees as an example of a GST-free benefit.<\/p>\n

Fringe benefit tax calculation process<\/h2>\n

Step 1: Work out the taxable value of the fringe benefit\/s<\/h3>\n

Work out the taxable value of each fringe benefit you provide to each employee. The rules for calculating the taxable value of a fringe benefit vary according to the type of benefit.<\/p>\n

With our examples of gym membership and tuition fees, let’s find their taxable value. The gym membership has a GST component subject to a tax credit; its total cost is $1,200. This is our FBT type 1 component.<\/p>\n

The non-GST fringe benefit tuition fee, which is our FBT type 2 component, costs $2000 in total.<\/p>\n

Step 2: Add up the value of GST-inclusive fringe benefits<\/h3>\n

Work out the total taxable value of all the fringe benefits you provide for which you can claim a GST credit (including excluded fringe benefits).<\/p>\n

We know this as $1,200 for our gym membership.<\/p>\n

Step 3: Multiply step 2 with type 1 gross-up rate<\/h3>\n

Work out the grossed-up taxable value of these benefits by multiplying the total taxable value of all the fringe benefits you can claim a GST credit for (from step 2) by the type 1 gross-up rate.<\/p>\n

The grossed-up rate is at 2.0802.<\/p>\n

For our example:<\/p>\n