Expense Payment FBT Calculator
Calculate expense payment fringe benefits tax after the otherwise deductible rule, employee contributions and Type 1 or Type 2 gross-up.
Use the supported work-related percentage, from 0% to 100%.
When the otherwise deductible rule can reduce FBT
The rule applies only to the extent the employee would have been entitled to an income-tax deduction if they had paid the expense themselves. The employee must be the recipient, and the employer must keep the required declaration, invoice, receipt or other substantiation. Private use remains taxable.
When the employee also contributes to a partly deductible expense, the reduction depends on what the employee can still deduct on their own share (FBTAA s 24(1)(ba)). ITAA 1936 s 51AH(1) sets that amount, and it turns on whether the employer's payment would have been the same even if the expense were not work-related. The calculator asks this question only when the answer changes the result.
The rule is legislated to narrow for FBT years starting on or after 1 April 2027. Under FBTAA s 24(1A), the otherwise deductible reduction no longer applies to an expense payment benefit provided under a salary packaging arrangement when the employee's deduction would be a kind covered by the standard deduction (ITAA 1997 s 25-130). Benefits outside salary packaging, and salary packaged expenses that fall outside the standard deduction, keep the rule. This calculator works on the FBT year ending 31 March 2027, so it still applies the reduction to every benefit.
Choose Type 1 when the employer is entitled to a GST input tax credit for the benefit. Choose Type 2 when no GST credit entitlement exists. This calculator estimates one expense payment benefit; it does not decide whether a different benefit category or exemption applies.
Frequently asked questions
What is the otherwise deductible rule for expense payment FBT?
The rule reduces the taxable value of an expense payment benefit only to the extent the employee would have been entitled to an income-tax deduction if they had paid the expense themselves. The employee must be the recipient of the benefit, and the employer needs the required declaration, invoice, receipt or other substantiation before relying on it.
What's the difference between Type 1 and Type 2 gross-up for an expense payment?
Type 1 applies when the employer is entitled to a GST input tax credit for the benefit. Type 2 applies when no GST credit entitlement exists, such as GST-free or input-taxed expenses. The type selected changes the gross-up factor applied before the 47% FBT rate.
Does an employee contribution reduce expense payment FBT?
Yes. The contribution reduces the amount the employer bears before the otherwise deductible rule applies. For a partly deductible expense, the size of that rule's reduction then depends on ITAA 1936 s 51AH. If the employer's payment would have been the same even if the expense were not work-related, the deductible percentage applies to the amount the employer bears. In any other case the reduction is the deductible share of the whole expense, capped at the amount the employer bears, which can bring the FBT payable to nil.
What FBT year applies to an expense payment benefit?
The FBT year runs from 1 April to 31 March. An expense payment benefit is grouped into the FBT year in which the employer reimburses or pays the expense on the employee's behalf, not the employee's own income year.
What records does an employer need for the otherwise deductible rule?
Employers generally need the employee's declaration about the private and work-related use of the expense, plus invoices, receipts or other substantiation showing what was paid. Without this evidence, the ATO can deny the otherwise deductible reduction and the full expense becomes taxable.
Tax Accuracy & Sources
Reviewed: 9 November 2026 · Tax year: 2026-27
Estimates FBT on an external expense payment benefit using the otherwise deductible reduction and employee contribution. It does not test every exemption, in-house benefit rule, substantiation requirement or associate-recipient restriction. It does not model the s 24(1A) withdrawal for salary packaged benefits in FBT years starting on or after 1 April 2027.