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Fringe Benefits Tax: what to know for 2026

The Fringe Benefits Tax (FBT) year end is 31 March, meaning that the 2026 FBT year is almost here.  For the 2026 year, taxpayers are required to lodge their FBT return and pay their FBT tax liability by 25 June 2026.

With increased ATO data matching tools and funding from the Government, it is expected that the ATO will undertake more reviews to ensure FBT compliance.

One area we expect the ATO to focus on is cars and the calculation of business use percentage. Another area we expect the ATO will focus on is mismatches in disclosures between income tax returns and FBT compliance.

With the end of the FBT year approaching, here are some things to consider:

Common types of benefits provided by employers that could attract FBT

  • Entertainment (entertainment should be distinguished from business meetings but would generally include situations where alcohol and food is made available).
  • Non-cash gifts (such as gift cards).
  • Provision of a motor vehicle or novated lease of a car to an employee.
  • Various expense payments made on behalf of employees (eg mortgage payments, car-parking).
  • Loans provided to employees

Special rules that can either reduce or eliminate the value of FBT otherwise payable by an employer

Minor benefits

Benefits provided by employers that have a value of less than $300 GST inclusive per employee and are provided on an irregular basis are exempt from FBT.

By way of example, a staff lunch, a Christmas party and annual staff rewards (such as gift cards) could all be exempt under the minor benefit FBT exemption if the value of the benefits were less than $300 GST inclusive calculated on a per employee basis.

Logbook method for cars

If an employee receives a car or holds a car through a novated lease, FBT will be payable on the private use percentage of the car.

If the employee maintains a logbook for a 12 week period which accurately discloses dates of travel, odometer readings and descriptions of each trip, an employer is able to calculate its FBT liability based on the private use percentage as determined under the logbook maintained.

Thus, if most of the kilometres driven in the car are work related, the FBT cost can be reduced.

Electric cars

The provision of an electric car or a novated lease of an electric car will be exempt from FBT if the car was first held on or after 1 July 2022 and the purchase value of the car was below the luxury car tax threshold ($91,387 for the 2026 FBT year).

Note that for the 2026 year, plug-in hybrid vehicles can still also be exempt from FBT if the vehicle was exempt in the 2025 year and therefore continues to be a financially binding commitment in relation to the use of the car on or after 1 April 2025.

Dual-cab utes

Single cab utes are exempt from FBT if there is limited private use of the vehicle.

However, for dual-cab utes to qualify for FBT exemption, (i) the ute must have a load capacity of more than one tonne or if under one tonne, must not be designed primarily for carrying passengers; and (ii) there is only limited private use of the vehicle.

The ATO stress that if a ute is used regularly for weekend travel, the private use of the vehicle will not be exempt from FBT.

Food and drinks consumed on business premises

FBT does not apply where food and/or drinks are provided and consumed by employees on business premises and on a business day.

Portable electronic devices that are mainly used for work purposes are exempt from FBT.

Portable electronic devices include mobile phones, laptops, tablets, calculators and portable printers. The exemption is available for one portable electronic device per year that services a particular function.

Otherwise deductible items

If an employee would have been eligible to claim a tax deduction had they incurred the cost of the benefit provided to them, the provision of the benefit by the employer will be exempt from FBT under the otherwise deductible rule.

By way of example, if an employer provides an interest free loan to an employee and the employee uses the loan to purchase a share portfolio, FBT will not apply on the provision of the interest free loan as the employee would have been eligible to claim an interest deduction for interest had interest been charged on the loan.

Special rules for charities

Charities are either FBT exempt entities (if they are a Public Benevolent Institution or a Health Promotion Charity) or FBT rebateable entities.

If the charity is FBT exempt, it can provide fringe benefits to employees (up to prescribed caps) without incurring any FBT liability. If the charity is FBT rebateable, the amount of FBT payable by the charity on fringe benefits provided to employees is reduced (up to prescribed caps).

Contact us

If you have any questions relating to FBT compliance, please do not hesitate to contact us on +61 3 9810 0700 or 

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