Published: October 2025

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Fringe Benefits Tax (FBT) is a key obligation for Australian employers providing non-cash benefits to staff. With the FBT year running from 1 April 2024 to 31 March 2025, understanding updates and compliance is vital to manage costs effectively.

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What is Fringe Benefits Tax?

FBT is levied on employers for benefits like company cars, entertainment, or expense reimbursements given instead of salary. The tax equals the value of these benefits, ensuring they are taxed similarly to income. Employers pay FBT, not employees, and it applies to benefits with a taxable value over certain limits.

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Key Updates for 2025

For the 2024-25 FBT year:

• The FBT rate remains 47%, matching the top marginal tax rate plus Medicare levy.
• Gross-up rates are unchanged: 2.0802 for Type 1 (GST-creditable) benefits and 1.8868 for Type 2 (non-GST-creditable).
• Electric vehicle (EV) exemptions continue for zero or low-emission cars under the luxury car tax threshold ($91,387 for 2024-25).
• From 1 April 2025, plug-in hybrid electric vehicles lose exemption status.
• The ATO emphasises compliance in areas like remote work benefits and car usage amid hybrid work trends.

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Calculating FBT Liability

Use this formula: Taxable Value × Gross-up Rate × FBT Rate (47%).

• Taxable Value: Based on market value or cost, adjusted for private use (e.g., via logbooks for cars).
• Gross-up: Makes the benefit equivalent to pre-tax income; apply Type 1 for GST-inclusive benefits.
• Example: A $1,000 Type 1 benefit grosses up to $2,080.20 ($1,000 × 2.0802), with FBT of $977.69 ($2,080.20 × 47%).

Reduce liability by employee contributions or exemptions. Use ATO calculators for precise estimates.

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Exemptions and Concessions

Certain benefits avoid FBT:

• Minor Benefits: Under $300 and infrequent.
• Work-Related Items: Laptops, phones, or tools primarily for employment.
• EVs: Full exemption for eligible models, encouraging green initiatives.
• Remote Area Benefits: Housing or meals in remote locations.
• Entertainment: Minor meals or events may qualify if not excessive.

Common taxable benefits include car parking, gym memberships, and health insurance reimbursements. Review hybrid work setups, as home office equipment might be exempt if work-focused.

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Reporting and Compliance Tips

• Lodge FBT returns by 21 May 2025 (or 25 June if via a tax agent).
• Maintain records like receipts and declarations for at least five years.
• Report grossed-up values over $2,000 on employee payment summaries, affecting areas like child support.
• To minimise FBT: Use salary packaging, claim exemptions, or shift to cash allowances (taxed via PAYG).

Stay informed via the ATO to avoid audits, especially in high-risk categories like vehicles and entertainment.

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Frequently Asked Questions (FAQ)

What is Fringe Benefits Tax (FBT) in Australia?‍

FBT is a tax paid by employers on non-cash benefits provided to employees, such as cars or entertainment, to ensure they are taxed equivalently to salary.

How is FBT calculated for 2025?

‍Calculate using the formula: Taxable value × Gross-up rate (2.0802 or 1.8868) × 47% FBT rate. Adjust for exemptions and employee contributions.

Are electric vehicles exempt from FBT in 2025?

‍Yes, zero or low-emission EVs under $91,387 are exempt, but plug-in hybrids lose this exemption from 1 April 2025.

What are common FBT exemptions?

‍Exemptions include minor benefits under $300, work-related items like laptops, and certain remote area perks. Entertainment may qualify if infrequent.

When do I need to lodge an FBT return?

‍Lodge by 21 May 2025, or 25 June 2025 if using a tax agent, for the year ending 31 March 2025.

How can I reduce my FBT liability?

‍Minimise through employee contributions, salary packaging, claiming exemptions, and accurate record-keeping for private use portions.

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