Type 1 – GST Expense fringe benefit

Type 1 – (GST Expense) fringe benefits are benefits an employer provides an employee whereby the employer is entitled to a GST credit for the provision of the benefit.

Example

Brian is employed by a Public Benevolent Institution. Brian enters into salary sacrifice arrangement with his employer in which  $2,200 is paid to his phone and internet account and  $3,300 is paid towards his electricity and gas account per FBT year. This is a total salary sacrifice amount of $5,500 per FBT year.

Since both expenses provided have GST in the price Brian’s employer is entitled to claim a $500 input tax credit (presuming the valid tax invoices and paid receipts have been kept)

To see the common benefits provided to employees of non-profit organisations please see the Expense payment fringe benefit page.

Calculating the grossed up value of fringe benefits provided.

The applicable gross up rate to use for Type 1 – GST Expense fringe benefits is:

  • 2.0802 (for FBT Year ending 31 March 2018)

Following on from the example above.

Since Brian’s employer is a PBI, Brian is eligible to claim a grossed up value of fringe benefits of up to $30,000 tax free.

In determining Brian’s grossed up value of fringe benefits provided Brian’s employer would do the following calculation.

$5,500 x 2.0802 = $11,441.10

Since the total grossed up value of fringe benefits provided to Brian is under $30,000 there is no FBT liability for Brian’s employer.

What amount is Reported on Brian’s PAYG Payments Summary?

When reporting the Reportable Fringe Benefit Amount (RFBA) on Brian’s PAYG Payment Summary Brian’s employer should gross up the value of fringe benefits provided by the lower gross up rate of 1.8868.

Eg. $5,500 x 1.8868 = $10,377.40 RFBA

Therefore the Reportable Fringe Benefit Amount reported on Brian’s PAYG Payment Summary at the end of the financial year will be $10,377.40 not $11,441.10