Fringe Benefits Tax (FBT)
What Employers Need to Know
The Fringe Benefits Tax (FBT) year ends on 31 March, and now is the time for employers to review what benefits they’ve provided to staff — and whether any liabilities apply. From electric vehicle exemptions to remote work arrangements and contractor classifications, there are several areas that the ATO is watching closely this year. To help you stay ahead, we’ve outlined the key focus areas and frequently asked questions to guide your FBT preparations.
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Key FBT Focus Areas in 2025
1. FBT Exemption for Electric Vehicles: Eligible electric vehicles may qualify for an FBT exemption if they meet certain criteria. This includes being a low or zero emission vehicle, first used on or after 1 July 2022, and valued below the luxury car tax threshold. Plug-in hybrids will no longer be exempt from 1 April 2025 unless grandfathered in under a binding agreement.
2. Work From Home Equipment: Items such as laptops and monitors provided primarily for work purposes are generally FBT-free. Businesses with turnover under $50 million can provide multiple similar items without triggering FBT, provided they are used mainly for work.
3. Contractor vs. Employee Classification: FBT applies to employees, not independent contractors. However, recent ATO rulings highlight that the true nature of the contract determines status. Misclassification can lead to unexpected FBT, superannuation, and payroll tax liabilities.
4. New Record-Keeping Options: From 1 July 2024, the ATO allows businesses to use existing records for FBT compliance instead of traditional declarations, as long as those records meet legislative requirements. This aims to reduce administrative burden.
5. High-Risk Areas to Watch: The ATO is focusing on mismatches where deductions are claimed without recognising the associated fringe benefits. Be cautious with entertainment deductions, journal entry contributions, and situations where no FBT return is lodged despite providing benefits.
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- FBT Compliance Review
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At Latitude Accountants, we make it easy for you to get the support you need. We are available via phone, email, and video conferencing to provide expert advice and answer your queries at a time that suits you. For those who prefer face-to-face consultations, you can also book an in-person meeting at your closest office.
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Frequently Asked Fringe Benefits Tax Questions
Do I need to lodge an FBT return if I only employ family members?
Is providing a laptop to a remote employee subject to FBT?
Are electric cars FBT exempt?
Does FBT apply to independent contractors?
Can I use journal entries for employee contributions to reduce FBT?
Yes, but strict conditions apply. The employee must have a legal obligation to contribute, and the arrangement must be documented correctly before accounts are finalised.
Are entertainment expenses deductible without paying FBT?
Only if they are minor, infrequent, and under $300 per employee — and your business uses the actual method. If using the 50/50 method, FBT applies to 50% of the cost.
Are home EV chargers covered by the FBT exemption?
No. The FBT exemption only applies to the vehicle — not home charging stations, even if packaged together.
What records do I need to keep for FBT?
You’ll need odometer readings, usage declarations, travel diaries, and other proof depending on the benefit. From 1 July 2024, some records can be simplified under new rules.
What happens if I don’t lodge an FBT return but should have?
The ATO may impose penalties and interest. If you’re unsure, it’s best to review your situation or speak with your accountant.
Do small businesses have different FBT rules?
Yes, businesses with turnover under $50 million can provide multiple similar work-related items (like laptops) without triggering FBT, and may benefit from simplified rules.
