Fringe Benefits Tax (FBT) Australia 2025
Understand Fringe Benefits Tax in Australia. Learn about FBT rates, exempt benefits, reportable fringe benefits, and how to minimise your FBT liability.
Fringe Benefits Tax is a tax employers pay on non-cash benefits provided to employees. Understanding FBT helps businesses structure remuneration packages tax-efficiently.
What is Fringe Benefits Tax?
FBT is a tax on benefits you provide to employees (and their associates) instead of, or in addition to, salary. Unlike income tax which employees pay, FBT is paid by the employer.
FBT Year 2024-25
- FBT rate: 47% (top marginal rate + Medicare levy)
- FBT year: 1 April 2024 - 31 March 2025
- Gross-up rate (Type 1): 2.0802 (GST claimable)
- Gross-up rate (Type 2): 1.8868 (no GST credit)
Common Fringe Benefits
Car Fringe Benefits
Providing a car (or paying car expenses) for private use is a fringe benefit. Two calculation methods:
| Method | Best For | Calculation |
|---|---|---|
| Statutory Formula | High private use | 20% × car cost × days available ÷ 365 |
| Operating Cost | High business use | Private % × (running costs + depreciation) |
Other Common Benefits
- Expense payments: Paying employee expenses (phone, internet, memberships)
- Living away from home: Accommodation, meals for work transfers
- Entertainment: Meals, tickets, corporate hospitality
- Loans: Interest-free or low-interest loans to employees
- Housing: Providing accommodation
- Property: Goods at discount (staff discounts)
FBT Exempt Benefits
These benefits are exempt from FBT:
Fully Exempt
- • Work-related devices (laptop, phone, tablet - one each)
- • Protective clothing
- • Briefcases, tools of trade
- • On-premises car parking (some conditions)
- • Emergency assistance (counselling, disaster relief)
Minor Benefits Exemption
- • Benefits under $300 each
- • Provided infrequently
- • Minor staff gifts, flowers, hampers
- • Christmas party (under $300 per head)
Electric Vehicle FBT Exemption
From 1 July 2022, eligible electric vehicles are FBT exempt if:
- Zero or low emissions vehicle (battery EV, hydrogen, plug-in hybrid)
- First held on or after 1 July 2022
- Car value below luxury car tax threshold ($91,387 for 2024-25)
- Car not previously used for private purposes
EV Salary Sacrifice Example
$65,000 Tesla Model 3 via novated lease:
Traditional car: ~$13,000 FBT annually
EV exemption: $0 FBT
Potential saving: $13,000/year tax benefit
Reportable Fringe Benefits (RFBA)
Even though FBT is paid by employers, grossed-up fringe benefits over $2,000 must be reported on employee payment summaries. This affects:
- Centrelink eligibility and payments
- HECS-HELP repayment thresholds
- Private health insurance rebate eligibility
- Family Tax Benefit assessments
Calculating FBT
FBT Payable = Taxable Value × Gross-up Rate × 47%
Example: $5,000 expense payment benefit
= $5,000 × 1.8868 × 47%
= $4,434 FBT payable
FBT Reduction Strategies
- Use exempt benefits: Laptops, phones, tools of trade
- EV salary sacrifice: Take advantage of EV exemption
- Employee contributions: Reduce taxable value with after-tax contributions
- Minor benefits: Keep individual benefits under $300
- Logbooks: Maintain accurate logbooks for car benefits
- Entertainment: Use 50/50 method or actual apportionment
Key FBT Dates
| Date | Event |
|---|---|
| 31 March | FBT year ends |
| 21 May | FBT return and payment due (if lodging yourself) |
| 25 June | FBT return due (if using tax agent) |
| 14 July | Payment summaries to employees (for RFBA) |
Key Takeaways
- FBT is paid by employers at 47% on grossed-up benefit value
- Many benefits are exempt (devices, EV cars, minor benefits under $300)
- Electric vehicle exemption provides significant tax savings
- RFBA affects employee government benefits and payments
- Proper record-keeping is essential for FBT compliance