Fringe Benefits Tax (FBT) Calculator

Fringe Benefits Tax in Australia

Fringe Benefits Tax (FBT) is a tax paid by the employer, separate from income tax, on certain non-cash benefits provided to employees. It applies when you provide benefits such as personal use of a company car, entertainment, private health insurance, or housing, and is charged at a rate of 47%.

How to calculate FBT

The FBT formula is: FBT payable = taxable value × gross-up rate × 47%. Use the Type 1 gross-up of 2.0802 where the employer can claim a GST credit on the benefit, or the Type 2 gross-up of 1.8868 where it can't. Any after-tax employee contribution reduces the taxable value dollar-for-dollar before grossing up, though a contribution has a GST cost of its own, covered below.

Worked example. An employer provides a $10,000 Type 1 benefit. Grossed-up taxable value = $10,000 × 2.0802 = $20,802. FBT payable = $20,802 × 47% = $9,776.94. The same $10,000 as a Type 2 benefit grosses up to $18,868, so FBT payable = $18,868 × 47% = $8,867.96.

Cars: base value, the four year reduction, the divisor and which gross-up

Under the statutory formula method the taxable value is (base value × 20% × days available for private use) ÷ days in the FBT year, less any after-tax employee contribution. Four details decide whether the answer is right:

• Base value is the GST-inclusive cost price plus dealer delivery and non-business accessories. It excludes stamp duty, registration and CTP (TD 94/28), so it is usually a few thousand dollars below what you paid at the counter.
• The four year reduction. Once an FBT year starts after the fourth anniversary of the day the car was first owned or leased, the base value drops to two thirds of the original figure and stays there (FBTAA 1986 s 9(2)(a)). It is decided at the start of the year, not partway through, and it does not extend to non-business accessories fitted later. On a $50,000 car that is the difference between $9,776.94 and $6,517.96 of FBT, so it is the single largest thing an ordinary fleet gets wrong.
• The divisor is the number of days in that FBT year: 365 normally, 366 when the year contains a 29 February. The years ending 31 March 2024 and 31 March 2028 both do. Pick the FBT year above and the calculator uses the right one.
• The gross-up is Type 1 (2.0802) where you can claim a GST credit on the car, which is the ordinary dealer purchase, and Type 2 (1.8868) where you cannot, for example a private sale from someone not registered for GST. Choosing Type 2 by mistake understates the FBT by about 10%.

The employee's reportable amount is a different number

The grossed-up value on this page is the base the employer's FBT is charged on. It is not the figure that goes on the employee's income statement. A reportable fringe benefits amount arises only once an employee's benefits for the FBT year come to more than $2,000 of taxable value, and it is always grossed up at the Type 2 rate of 1.8868 whatever the benefit type. So a $10,000 Type 1 benefit is $20,802 of FBT base and $18,868 of reportable amount. The reportable amount is not taxed, but it is counted in the income tests for family assistance, child support, the Medicare levy surcharge and several offsets, so it has a real cash effect on the employee's household.

Paid once a year, or four times

An employer whose FBT for the previous year came to $3,000 or more pays the current year by quarterly instalments at label F1 on the activity statement, each one a quarter of the notional tax amount (generally last year's liability), with the balance settled on lodgment. Under $3,000 the whole amount is paid when the return is lodged, due 21 May. The results above show the annual figure, the quarterly instalment and a monthly accrual side by side for that reason.

FBT rates and gross-up

The FBT rate is 47% (equal to the top marginal tax rate plus Medicare levy). The gross-up mechanism adjusts the taxable value to reflect the pre-tax income an employee would need to earn to buy the benefit themselves. Type 1 gross-up (2.0802) applies when GST credits are claimable; Type 2 (1.8868) when they're not. All three figures have been unchanged since the FBT year ending 31 March 2018.

Reducing FBT liability

The usual levers, each with the condition that actually governs it:

• Employee contributions cut the taxable value dollar for dollar, but where the benefit was a taxable supply the contribution is consideration for it and one eleventh goes back out as GST. A $2,000 contribution on a Type 1 benefit saves $1,955.39 of FBT and costs $181.82 of GST, so the real saving is $1,773.57.
• The operating cost method often beats the statutory formula for a car driven mostly for business, but it requires a valid logbook kept for 12 continuous weeks. Without the logbook the choice is not available, and this calculator only runs the statutory formula.
• Minor benefits are exempt where the notional taxable value is under $300 and it would be unreasonable to treat the benefit as a fringe benefit, judged on frequency, regularity and the other criteria in s 58P. A $290 gift card every fortnight fails that second test.
• Work-related items such as a portable electronic device, tools of trade or protective clothing are exempt where they are primarily for use in the employee's employment, generally one item of each type per employee per year for a small business.
• Electric cars are exempt where they were first held and used on or after 1 July 2022 and the value at first retail sale was under the luxury car tax threshold for fuel-efficient vehicles. Plug-in hybrids dropped out on 1 April 2025 unless a binding commitment was already in place. An exempt car still counts towards the employee's reportable amount, and the government announced on 5 May 2026 that the full exemption narrows from 1 April 2027.

What this calculator does not do

It runs the statutory formula only, assumes an ordinary taxable employer, and does not model the operating cost method, entertainment valuation, car parking, novated lease running costs, or the exempt and rebatable employer caps that apply to charities, hospitals and ambulance services. The methodology note under the results lists the exclusions in full, and it is worth reading before you rely on a figure.

Where FBT sits in the cost of employing someone

FBT is an employer tax, so it belongs beside the other on-costs rather than in the employee's own tax picture. The true cost of an employee calculator adds the Super Guarantee, workers compensation and your share of payroll tax to a salary, and the FBT on any car or entertainment you provide sits on top of that figure. If you would rather the grossed-up values, the employee contributions and the reportable amounts were tracked as they happen instead of reconstructed each March, that is what the finance and accounting module is for.