FBT, PAYG and PAYE for Australian employers
What Fringe Benefits Tax and PAYG withholding are, and why the term PAYE still appears in Australia and New Zealand conversations.
PAYG withholding is the amount an employer withholds from wages and pays to the ATO. Pay As You Go replaced the older PAYE label in Australia in 2000, while New Zealand still uses PAYE. Fringe Benefits Tax (FBT) is a separate tax that the employer pays on certain benefits given to employees or their associates, such as a car for private use. The FBT year runs from 1 April to 31 March. The FBT return is due on 21 May, and the ATO gives later dates in some cases, such as when a tax agent lodges. The FBT rate is 47%, applied to the grossed-up value of the benefit. These are payroll and tax return matters. 4invoices has no payroll or FBT features, so use payroll software or a tax agent for them.
- PAYG withholding is tax withheld from wages.
- PAYE is the New Zealand term and an old Australian label.
- FBT is paid by the employer on benefits, for the year 1 April to 31 March.
- 4invoices does not calculate PAYG or FBT.
How it works
Register as an employer for PAYG withholding. The ATO tells you how often to pay based on your withholding amounts.
Withhold tax from each pay using the ATO tax tables or your payroll software.
Record benefits you provide during the FBT year. Examples are private use of a car, or paying an employee's personal expenses. Some benefits are exempt or reduced.
Work out the FBT and lodge the return by the due date. Your tax agent can prepare it.
Legal references
- Taxation Administration Act 1953 - PAYG withholding framework.
- Fringe Benefits Tax Assessment Act 1986 - what a fringe benefit is and how FBT is worked out.
- Australian Taxation Office - FBT rates, gross-up rates and lodgement dates.
Frequently asked questions
Is PAYG the same as PAYE in Australia?
In practice PAYG withholding is what many people still call PAYE. PAYG is the current Australian term. PAYE is the current term in New Zealand.
When is the FBT return due?
The FBT year ends on 31 March and the return is generally due on 21 May. Later dates can apply if a tax agent lodges. Check the ATO page for the current year.
What is the FBT rate?
The FBT rate is 47%. It applies to the grossed-up taxable value of the benefit, which uses one of two gross-up rates depending on whether the employer could claim a GST credit.
Does 4invoices calculate PAYG withholding or FBT?
No. 4invoices creates invoices and PDFs. It does no payroll, does not track benefits and does not report to the ATO.