Fringe Benefits Tax (FBT) 2025 Guide

The Fringe Benefits Tax (FBT) year ended on 31 March 2025, and it’s time for business owners across Australia—especially in New South Wales—to take a closer look at their obligations. Whether you’re providing electric vehicles, laptops, client lunches or car spaces, the ATO wants to know about it.

In this blog, we’ll break down the major changes and risk areas for 2024–25, cover key questions, and help you stay compliant with confidence.

What is Fringe Benefits Tax (FBT)?

FBT is a tax paid by employers on certain benefits provided to employees (or their associates) in place of, or in addition to, salary or wages. These benefits can be anything from a work car to tickets to a sporting event.

Who pays FBT?
The employer, not the employee, pays FBT. It’s separate from income tax.

When is FBT due?
The FBT year runs from 1 April to 31 March, and your return is due 21 May (or later if lodged via a tax agent).

What are common fringe benefits?

• Company vehicles used for private purposes

• Parking at or near the workplace

• Reimbursement of private expenses

• Work-related items used personally (e.g. laptops)

• Entertainment (meals, shows, events)

• Gifts and rewards

Key FBT Topics for the 2024–25 Year

1. Are Electric Vehicles Still FBT Exempt in 2025?

Yes, but with changes coming. From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) will no longer be exempt from FBT unless:

• The benefit was provided before 1 April 2025, and
• There's a financially binding agreement to continue private use beyond this date.

Fully electric and hydrogen fuel cell vehicles remain exempt if:

• First held and used after 1 July 2022
• Valued under the luxury car tax threshold ($89,332 for 2024–25)

Q: Does the exemption apply to charging stations? No. Home charging stations are not covered under the FBT exemption.

Q: How do I calculate employee electricity use? The ATO allows a shortcut rate of 4.20 cents per kilometre for home charging, applicable only to fully electric vehicles.

2. Are Work-from-Home Items Subject to FBT?

Generally not – if the equipment is primarily for work use. This includes laptops, monitors, phones, and similar items.

Q: Can I give multiple similar devices? Yes, if your business has an aggregated turnover of less than $50 million and the items are for work use.

Q: What if staff use them privately too? Then a percentage of the benefit may be subject to FBT based on private usage.

3. Contractor or Employee? Why It Matters for FBT

FBT applies to employees, not genuine independent contractors. But recent High Court decisions and ATO guidance (TR 2023/4) highlight that the substance of the contract is key.

Q: How do I know if my contractor is classified correctly? Check:

• Is there a comprehensive written agreement?
• Does the agreement reflect the actual working relationship?
• Are both parties clear on obligations (e.g. super, tax, FBT)?

Q: What happens if I misclassify? You may owe back payments for FBT, superannuation, or payroll tax.

4. What Are the New Record-Keeping Options from July 2024?

From 1 July 2024, employers can use existing business records instead of traditional declarations for FBT purposes – provided they meet legislative standards.

This includes records for:

• Travel diaries
• Living-away-from-home allowances
• Private vehicle use
• Expense reimbursements
• Relocation and holiday transport

Q: Do I still need odometer readings? Yes. You must still record car odometer readings on 31 March and 1 April each year. Tip: Ask staff to take a photo and email it in.

5. Common FBT Traps to Avoid

Entertainment Deductions

Claiming deductions for meals, events or staff perks without recognising the FBT component is a common error.

Q: What method should I use?

• If using the 'actual' method: minor benefits under $300 may be exempt.
• If using the '50/50' method: half of the cost is subject to FBT, and only 50 percent can be claimed.

Journal Entry Contributions

Using journal entries to record employee contributions must be handled correctly:

• The employee must be obligated to contribute.
• The employer must owe them an amount (e.g. unpaid bonus).
• There must be formal offset documentation.
• It must be recorded before the accounts are finalised.

Q: Can I just journal it at year-end? Only if there's proper documentation and it meets the criteria above. Otherwise, the ATO may disallow it.

Not Lodging When You Should

If you're providing:

• Cars or car spaces
• Entertainment or meals
• Private reimbursements
• Employee discounts

...and not lodging an FBT return, you may be non-compliant.

What Counts as a Fringe Benefit? Understanding the Basics

Fringe benefits can take many forms and are often more than just vehicles and entertainment. Some common examples include:

• Allowing personal use of a work car

• Paying private expenses such as school fees

• Providing low-interest loans

• Discounted goods or services

• Housing and accommodation support

Q: Are all benefits taxable? No. Certain items are specifically exempt from FBT, such as:

• Portable electronic devices used for work (like laptops and phones)

• Protective clothing and safety equipment

• Minor and infrequent benefits under $300

Q: What about meal allowances or travel? These may be exempt if they meet the conditions for business-related travel or are covered by living-away-from-home allowances, but accurate documentation is crucial.

Understanding what counts as a fringe benefit and how it's treated under FBT law can help prevent costly mistakes and reduce audit risk. Speak to an accountant if you're unsure whether a benefit should be reported.

Do These Rules Apply Across Australia?

Yes – FBT is a federal tax and applies nationally. However, some thresholds and state-based payroll tax rules differ, so it's important to consider both FBT and related obligations if you're operating across multiple states.

How to Stay Compliant

• Review all staff benefits provided between 1 April 2024 and 31 March 2025

• Ensure correct classifications (contractor vs employee)

• Confirm if any minor benefits apply for exemption

• Collect all required records and declarations

• Engage your accountant before finalising returns

Call the experts

At Latitude Accountants, we simplify the FBT process, reduce your risk, and ensure you stay compliant. Whether you need support calculating benefits, reviewing contractors, or preparing your FBT return, we are here to help.

Contact us today to discuss your FBT obligations or get tailored advice

📞 Contact Latitude Accountants
📧 info@latitudeaccountants.com.au
🌐 www.latitudeaccountants.com.au

Disclaimer

This blog provides general information only and is not intended as tax advice. The information is based on Australian legislation as of the 2024–25 FBT year. You should consult a qualified accountant or tax professional regarding your specific circumstances before acting on any of the content provided.

For personalised advice tailored to your situation, please contact the team at Latitude Accountants.