Fringe benefits case studies
Fringe benefits (annual calculation)
Pure Science Pty Ltd employs workers throughout Australia in the 2022-23 financial year. All employees receive the following taxable fringe benefits.
Type of benefit | NSW | Interstate |
---|
Living away from home allowance
|
$15,000
|
$25,000
|
Expense payments
|
$30,000
|
$10,000
|
Cars using the operating cost method
|
$65,000
|
$35,000
|
Meal entertainment
|
$10,000
|
$10,000
|
Total
|
$120,000
|
$80,000
|
The total taxable amounts have been split into the following type 1 and type 2 aggregate amounts.
Aggregate | NSW | Interstate |
---|
Type 1
|
$70,000
|
$45,000
|
Type 2
|
$50,000
|
$35,000
|
Total
|
$120,000
|
$80,000
|
In order to include the correct fringe benefit amount in the 2023 annual reconciliation, Pure Science calculated the gross-up amount using the 2023 type 2 factor:
| NSW | Interstate |
---|
Total aggregate amount
|
$120,000
|
$80,000
|
Type 2 rate
|
1.8868
|
1.8868
|
Total taxable fringe benefits*
|
$226,416
|
$150,944
|
*(Type 1 aggregate + Type 2 aggregate) × 1.8868
As a result, Pure Science Pty Ltd reported $226,416 as liable NSW wages and $150,944 as liable interstate wages within their 2023 payroll tax annual reconciliation.
Fringe benefits (monthly estimate method)
The value of fringe benefits of Rose Walls Pty Ltd in its 31 March 2023 Fringe Benefit Tax (FBT) return after grossing up by the type 2 factor is $120,000. Excluding fringe benefits, Rose Walls has $600,000 in taxable wages for the 2022-23 financial year, of which $300,000 were NSW wages.
The monthly estimate method, was used to calculate the taxable value of FBT for Rose Wall’s monthly payroll tax returns.
- Estimated NSW fringe benefits are ($300,000 ÷ $600,000) × $120,000 = $60,000
- Fringe benefits to be declared in each month July 2023 to May 2024 in NSW payroll tax return is $60,000 ÷ 12 = $5,000
After completing the FBT return for the period ending 31 March 2024, the value of fringe benefits for Rose Walls Pty Ltd after grossing up by the type 2 factor is $180,000. Excluding fringe benefits, the total Australian taxable wages for the 2024 financial year were $800,000, $600,000 of which were NSW wages.
Rose Walls must make an adjustment in its 2024 annual reconciliation to reflect the actual taxable amount of fringe benefits.
- The adjustment for the 2024 annual reconciliation is ($600,000 ÷ $800,000) × $180,000 = $135,000.
The amount of NSW fringe benefits that Rose Walls Pty Ltd must declare in the 2024 annual reconciliation is $135,000.