For business owners in Brisbane, navigating the world of taxes can feel overwhelming. One area that often sparks questions is Fringe Benefit Tax, or FBT. This federal tax applies to non-cash benefits provided to employees, like company cars or private health insurance. With the current FBT year running from April 1, 2024, to March 31, 2025, and a tax rate of 47%, it’s worth understanding how it works—especially with Queensland’s Payroll Tax in the mix. At EEA Advisory, we’ve put together this detailed guide to help Brisbane businesses grasp FBT, calculate it, and manage it effectively.
What is Fringe Benefit Tax (FBT)?
FBT is a tax paid by employers across Australia, including those in Brisbane, on certain benefits given to employees instead of cash wages. Introduced in 1986 under the Fringe Benefits Tax Assessment Act 1986, it’s managed by the Australian Taxation Office (ATO). Unlike income tax, which employees handle, FBT falls on the employer. It applies to benefits for current, former, or future employees, as well as directors or their family members, as long as it’s tied to their employment.
The FBT year runs from April 1 to March 31. For 2024-25, the rate is 47%, matching the top marginal income tax rate plus the Medicare levy. This ensures the tax reflects what an employee would need to earn in salary to buy the benefit after tax.
Types of Fringe Benefits
Not all benefits are treated the same under FBT. They’re divided into two types based on GST credits:
- Type 1 Benefits: These allow the employer to claim a GST input tax credit—think work-related items like laptops or tools.
- Type 2 Benefits: These don’t qualify for GST credits and often cover personal perks, such as a company car for private use or entertainment expenses.
Common fringe benefits in Brisbane workplaces include:
- Company cars available for private use
- Private health insurance plans
- Gym or fitness club memberships
- Reimbursement for phone or internet bills
- Entertainment costs, like meals or event tickets
Some benefits avoid FBT entirely. Minor benefits under $300 per employee per year, work-only items, and perks from religious institutions to practitioners are exempt, per the ATO’s rules.
How FBT is Calculated
Calculating FBT takes a few steps to get right. Here’s the breakdown:
Step 1: Identify Taxable Benefits
First, businesses need to spot which benefits count for FBT. Exempt items, like a work-only laptop, get skipped. But a company car with private use? That’s taxable.
Step 2: Work Out the Taxable Value
Next, the benefit’s value is calculated. This is what the employee gains, minus any contribution they make. For instance, if a company car is worth $10,000 for private use and the employee pays $2,000, the taxable value is $8,000.
Step 3: Apply the Gross-Up Rate
The taxable value gets “grossed up” to mirror the pre-tax income needed. For 2024-25, the rates are:
- Type 1: 1.475 (for benefits with GST credits)
- Type 2: 1.8868 (for benefits without GST credits)
That $8,000 company car (Type 2) becomes $8,000 × 1.8868 = $15,094.40 after grossing up.
Step 4: Calculate the FBT Owed
Finally, the grossed-up amount is multiplied by 47%. For the car: $15,094.40 × 0.47 = $7,094.37. That’s the FBT owed.
Businesses self-assess FBT, file a return, and pay by the due date—typically May after the FBT year. The ATO’s website has tools to assist.
FBT Meets Queensland Payroll Tax
FBT is federal, but Brisbane businesses must also consider Queensland’s Payroll Tax. This state tax applies when taxable wages top $1.3 million in a financial year (2024-25 threshold). Fringe benefits count toward those wages, though the calculation differs from FBT.
For Payroll Tax, all fringe benefits—Type 1 or Type 2—use the Type 2 gross-up rate of 1.8868. A Type 1 benefit, like a $2,000 work laptop, gets grossed up to $3,773.60 for Payroll Tax, compared to $2,950 for FBT. This higher figure adds to taxable wages, potentially increasing the state tax bill.
This overlap calls for careful tracking. Businesses juggle FBT for federal compliance and adjust for Payroll Tax at the state level, as outlined by the Queensland Revenue Office.
Ways to Cut FBT Costs
FBT can hit hard, but there are ways to ease the load. Consider these options:
- Employee Contributions: Employees paying part of the benefit—like $1,000 for a company car—lowers the taxable value and FBT.
- Salary Sacrifice: Offering benefits instead of salary can sometimes trim the taxable amount, if structured well.
- Exempt Benefits: Small perks under $300 per employee per year can qualify as minor benefits and skip FBT.
- Good Records: Detailed logs—like a car logbook—can show work use, reducing the taxable portion.
At EEA Advisory’s Tax Advisory service, strategies like these are tailored to Brisbane businesses, helping manage cash flow while staying compliant.
Staying Compliant in Brisbane
Businesses offering taxable benefits must register for FBT via the Business Registration Service. Records need to be kept, employee declarations gathered, and an FBT return lodged yearly—usually by May. Need help? Check out EEA Advisory’s Bookkeeping services for support.
For Payroll Tax, fringe benefits are reported in monthly or annual returns. Estimates might be used during the year, then reconciled with actual FBT figures, per Queensland Revenue Office guidance.
Brisbane-Specific Challenges
FBT rules are consistent nationwide, but Brisbane businesses face a twist with Queensland’s Payroll Tax. The universal Type 2 gross-up rate for all benefits can inflate state tax costs, especially for Type 1 benefits like work laptops. It’s a detail that demands extra care.
Local tax advisors can lighten the load. Firms like EEA Advisory, with expertise in Business Advisory, offer Brisbane-specific guidance to tackle federal and state rules smoothly.
FBT vs. Payroll Tax: A Quick Comparison
Here’s a table to highlight the differences:
| Aspect | FBT Calculation | Payroll Tax Calculation (Queensland) |
|---|---|---|
| Benefit Type | Type 1 or Type 2, based on GST credits | All benefits treated as Type 2 |
| Gross-Up Rate | Type 1: 1.475, Type 2: 1.8868 (2024-25) | Type 2: 1.8868 (2024-25) |
| Tax Rate | 47% of grossed-up value | Included in taxable wages, taxed at state rate |
| Example (Type 1, $2,000) | Grossed-up: $2,950, FBT: $1,386.50 | Grossed-up: $3,773.60, included in wages |
| Example (Type 2, $10,000) | Grossed-up: $18,868, FBT: $8,867 | Grossed-up: $18,868, included in wages |
This comparison shows why both taxes need to be planned together.
Wrapping It Up
For Brisbane businesses, mastering FBT means balancing federal rules with Queensland’s Payroll Tax quirks. The Type 2 gross-up for all benefits in Payroll Tax adds complexity, but with good records and planning, it’s doable. Local expertise can ensure compliance supports growth, not hinders it.
Whether it’s a company car, gym membership, or laptop, understanding FBT helps businesses reward their teams without tax surprises. As of March 18, 2025, with the 2024-25 FBT year in progress, now’s the perfect time to get it sorted.
