How to enter the FBT onto an employee’s record for STP?

Legacy KB ID: 5148

Question

How do I enter the FBT amount for an employee’s record for STP?

Answer

We offer the following solution as one way of handling the FBT situation. Users should consult with their Accountant on the best way to handle FBT in their accounts. 

FBT can be entered as a one-off entry to the employee, either as part of a normal pay or as a separate transaction. 

Note:
As an employer, you must self-assess your FBT liability for the FBT year (1 April to 31 March). If you have an FBT liability, you must lodge an FBT return and pay the FBT you owe.

The amount entered must be the grossed-up value of the FBT benefit at a tax rate of 47%.

Example -
FBT on a gym membership.

Jenni runs a small consulting firm. She provides her employee, Anton, with a gym membership that costs $1,100 (including $100 GST).

This is a fringe benefit. Jenni works out the FBT as follows: Taxable value of the benefit ($1,100)

* The gross-up rate (for a GST-inclusive fringe benefit the rate is 2.0802)
* The FBT rate (47%)
= FBT of $1,075.46.

Jenni must prepare and lodge an annual FBT return and pay her FBT liability.

She may also need to calculate and report Anton's reportable fringe benefits amount in his end-of-year payment information.

As the gym membership is subject to FBT, Jenni can claim:
* An income tax deduction and GST credit for the cost of the gym membership.
* An income tax deduction for the FBT paid.

It is assumed that the actual expenditure for this non-cash benefit has been accounted for elsewhere in the accounts. 

 

There are two parts to the process:

 

  • FBT contribution

Payroll type:  Addition

Payroll Expense Account: Payroll Expense: FBT grossed up value

Tax Tracking Type:  Fringe Benefits Tax

Taxes:  None

Amount:  e.g. 10,000.00

 

  • FBT Deduction

Payroll Type:  Addition (Used as negative)

Payroll Expense Account: Payroll Expense: FBT grossed up value

Tax Tracking Type: None

Taxes: None

Amount:  e.g. -10,000.00

 

Enter these items in the Additional payroll items section of the pay. 

The effect on Net Pay is zero.

The effect on Gross Payments is zero

The FBT field will show the amount – e.g. 10,000

The effect on the Payroll Expense account is zero. 



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Or Log a Support Ticket: https://www.reckon.com/au/support/

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