Organisations with the FBT Rebate will incur FBT on the Grossed up value of fringe benefits provided to each employee. The Organisation will then apply the 47% FBT rebate to determine the net FBT liability for the organisation. (for FBT Year ending 31 March 2016)
FBT Calculation – Rebatable Organisations
Luke is currently employed by an FBT rebatable organisation. Luke wishes to salary package $15,899 onto a Community Salary Packaging General Expenses Card.
To determine the organisation’s FBT Liability the following calculation will have been applied:
The Community Salary Packaging General Expenses Card is a type 2 GST Free expense and is therefore grossed up using a rate of 1.8868.
As a result of providing $15,899 of fringe benefits to Luke, the Employer will now be liable for an FBT expense of $7,473.
In many scenarios this significant FBT liability will not warrant rebatable employers to offer salary packaging to staff in this instance.
An option available to rebatable employers to eliminate/reduce this FBT expense is to have an arrangement with employees whereby the FBT contributions are made back to the organisation.
The employee FBT contributions made back to the organisation can ensure that the organisation is not out of pocket the FBT liabilty incurred.
In the above example if Luke makes $7,473 of FBT contributions back to his employer throughout the FBT year this will cover the amount of FBT incurred by the organisation.
Please click the following link to view a salary packaging worked example for employees of Rebatable Organisations.