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