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Fringe benefits

Fringe benefits (annual calculation)

Pure Science Pty Ltd employs workers throughout Australia in the 2018-19 financial year. All employees receive the following taxable fringe benefits.

Type of benefitNSWInterstate
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.

AggregateNSWInterstate
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 2019 annual payroll tax return, Pure Science calculated the gross-up amount using the 2019 type 2 factor:

NSWInterstate
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 2019 annual payroll tax return.

Fringe benefits (monthly estimate method)

The value of fringe benefits of Rose Walls Pty Ltd in its 31 March 2018 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 2018-19 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 2018 to May 2019 in NSW payroll tax return is $60,000 ÷ 12 = $5,000

After completing the FBT return for the period ending 31 March 2019, 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 2018-19 financial year were $800,000, $600,000 of which were NSW wages.

Rose Walls must make an adjustment in its 2018-19 annual return to reflect the actual taxable amount of fringe benefits.

  • The adjustment for the 2018-19 annual return is ($600,000 ÷ $800,000) × $180,000 = $135,000.

The amount of NSW fringe benefits that Rose Walls Pty Ltd must declare in the 2018-19 annual adjustment return is $135,000.

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