Home > Updates > You might have missed these FBT changes!
With the top personal tax rate of 39% being introduced from 1 April 2021, a new FBT Single Rate of 63.93% was also introduced. This may have caught some taxpayers off-guard with them continuing to use the old Single Rate of 49.25%, or automatically adopting the new higher Single Rate without considering what other options may have been available to them, including a new Pooled Alternative Rate.
The Alternative Rate has moved to 49.25% (from 42.86%) for non-attributed benefits and to 63.93% (from 49.25%) for attributed benefits. If you adopt the Full Alternate Rate method, you can continue to use the Employees Marginal FBT Rate for attributed benefits, however these have also increased.
The new Pooled Alternate Rate provides a simpler calculation method for businesses with employees earning between $70,000 – $160,000 and who receive few fringe benefits. This option allows the use of both the 49.25% and 63.93% rates, but still does require some work in determining what benefits are attributable.
The table below shows a simple example of how the application of the Single Rate compares to the other Alternate Rate options. Where there is a variation in employee incomes, the Alternate Rate options can provide significant FBT savings, bringing down the overall FBT rate payable for a business. The example below shows the difference between using the new Pooled Alternate Rate instead of the Single Rate achieves a 25% ($5,815) saving which is well worth the extra effort of doing the calculations.
If you are weighing up what method would best suit your business or would like to discuss employee remuneration package options, contact one of our knowledgeable Nexia advisors.
