The employee will then pay income tax on the lower amount. In this way disposable income is increased. While it is the responsibility of the employer to meet the FBT liability, remuneration packaging will generally require the cost of FBT to be charged against the salary package of the employee. FBT is levied at 48.5 per cent. Importantly, the FBT rate is not applied to the direct cost of the benefit, but rather, to the taxable value of the benefit, as determined by Australian Tax Office rules.
Some items remain viable for the purposes of salary packaging.
Some benefits remain viable for the purposes of salary packaging. Items attracting full FBT Category 1 items are generally described as expenses not otherwise tax deductible to the employee. Health insurance premiums Holiday expenses Private telephone, electricity, gas etc. The result here is no overall reduction in tax as income tax normally payable to achieve the cost of benefit will be replaced by an equivalent FBT liability. Items attracting partial FBT These items offer scope for salary packaging depending on individual circumstance.