Remunerator News

Feb 25 2015

Changes to the FBT Rate

Changes to the FBT Rate – CORPORATE EMPLOYERS

As part of the 2014-15 Federal Budget, the Government has announced that it will increase the top marginal tax rate for high income earners from 47% to 49% including the Medicare levy, effective from 1 July 2015.

As a consequence of this change, the FBT payable on any items that attract FBT will increase. This includes employees with a novated lease on the full FBT method.

As a result of the FBT rate increasing from 47% to 49%, we have increased employee pre-tax deductions accordingly.

However, it is important to note that the most widely used salary packaging method for a novated lease, is the Employee Contribution Method (ECM) where no FBT is payable.

The impact of the change therefore will only be noticed when we issue the FBT Reporting Suite for the year 2015-16 in April 2016.

Changes to the FBT Rate – PUBLIC HOSPITAL AND CHARITY EMPLOYERS

As part of the 2014-15 Federal Budget, the Government has announced that it will increase the top marginal tax rate for high income earners from 47% to 49% including the Medicare levy effective from 1 July 2015.

As a consequence of this change, Employees who are salary packaging Type 1 Benefits (expenses that attract GST) will receive a marginal Threshold increase to $17,667 for Hospitals and $31,177 for Charities.

Employees Salary Packaging Type 2 benefits (that do not attract GST) will have no change to the amount they can package.

As the majority, if not all of our customers are salary packaging Type 2 Benefits such as Mortgage and Credit Cards, there is effectively no change to the amount your Employees can salary package.

The main impact of the change will only be noticed when we issue the FBT Reporting Suite for the 2015-16 year in April 2016.

Changes to the FBT Rate – REBATE EMPLOYERS

As part of the 2014-15 Federal Budget, the Government has announced that it will increase the top marginal tax rate for high income earners from 47% to 49% including the Medicare levy, effective from 1 July 2015.

As a consequence of this change, the FBT payable on any items that attract FBT will increase. Employees utilising Salary Packaging currently benefit from a Rebate of 48% of the FBT payable. However, this will slightly increase by 1% to a 49% rebate in 2015-16.

As a result of both the FBT rate and the Rebate increasing, there is a minor change in the actual FBT payable and we have increased employee pre-tax deductions accordingly.

The impact of the change therefore will mainly be noticed when we issue the FBT Reporting Suite for the year 2015-16 in April 2016.