New FBT gross-up and tax rate effective 1/4/2014

New FBT gross-up and tax rate effective

 

As announced some time ago, the rate of Medicare Levy will increase from 1.5% to 2% effective from 1st July 2014 in order to help fund the National Disability Insurance Scheme. One implication of this is the increase in both the rate of tax for Fringe Benefits Tax (to 47% from 46.5%), as well as the increase in the gross-up factors, which will take effect from 1st April 2014 (not July as with the Medicare Levy). The new Type 1 gross-up rate will be 2.0802 (previously 2.0647), and the new Type 2 gross-up rate will be 1.8868 (previously 1.8692). Employers and employees need to keep these in mind when calculating salary packages for the period beyond 1st April 2014.

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