As we approach the end of the Fringe Benefits Tax (FBT) year, it’s a good time for employers to check whether they’ve provided any fringe benefits to employees – and whether an FBT return is required.
The 2026 FBT year ends on 31 March 2026 and covers benefits provided between 1 April 2025 and
31 March 2026.
Many businesses don’t realise they’re providing fringe benefits until it’s time to reconcile vehicle use,
employee reimbursements, parking, or salary packaging arrangements – so reviewing early can help
avoid last-minute issues and potential penalties.
What is Fringe Benefits Tax (FBT)?
FBT is a tax paid by employers on certain benefits provided to employees (or their associates) in
addition to salary or wages. These benefits are often provided through salary sacrifice arrangements
or employer-paid personal expenses.
Common examples include:
– Company cars used for private purposes
– Car parking benefits
– Entertainment and meals
– Employee reimbursements or paid personal expenses
– Low-interest loans
– Living-away-from-home benefits
What are the common FBT hotspots in 2026?
1) Motor vehicles and private use
Vehicle-related benefits remain one of the most common areas where businesses make mistakes.
The ATO is increasing its scrutiny in this space, particularly around employer-provided vehicles,
logbooks and classifications.
If your business provides a vehicle (or vehicle allowance), it’s important to confirm:
– Whether the vehicle is a “car” for FBT purposes
Whether private use has occurred
– Whether the logbook method or statutory method applies
– Whether adequate evidence is being kept
Even small errors can result in amendments, interest and penalties if discovered later.
2) Plug-in hybrid electric vehicles (PHEVs) – important change
A key update affecting the 2026 FBT year is the electric car exemption eligibility change for plug-in
hybrid electric vehicles (PHEVs).
From 1 April 2025, a plug-in hybrid electric vehicle is no longer considered a “zero or low emissions
vehicle” under FBT law.
This means many plug-in hybrids will no longer qualify for the FBT electric car exemption from this
date unless specific transitional conditions apply.
If your business provides an EV or PHEV through salary packaging or novated leasing, it is worth
reviewing this now to avoid unexpected FBT liabilities.
3) Car parking and tolls
Businesses that provide or subsidise employee parking may be required to report and pay FBT
depending on:
– proximity to the workplace
– whether there is a nearby commercial parking station
– whether the employee is parking during work hours
Tolls and parking costs paid on behalf of employees can also fall within FBT rules depending on the
circumstances.
4) Entertainment and staff benefits
Entertainment (including meals and events) continues to be a frequent area of confusion, especially
where benefits are provided to staff in addition to clients.
Examples can include:
– staff functions
– meals and drinks
– gift cards
– rewards and incentives
The right FBT treatment depends heavily on the purpose, recipients, and documentation.
What’s exempt from FBT?
Certain work-related items can remain exempt from FBT when primarily used for employment
purposes, including:
– portable electronic devices (generally limited to one per employee per FBT year)
– computer software
– protective clothing
– briefcases
– calculators
– tools of trade
Key dates employers should remember
For the 2026 FBT year:
– FBT year ends: 31 March 2026
– Period covered: 1 April 2025 – 31 March 2026
– Due date for lodgement of FBT return: 25 June 2026
If you believe you may have provided fringe benefits during the year (even unintentionally), it’s best to
review this early to confirm reporting and lodgement obligations.
ATO compliance focus: why it matters in 2026
The ATO has signalled stronger focus and review activity around Fringe Benefits Tax — particularly
for vehicle-related benefits.
For businesses, this can mean:
– higher likelihood of review activity
– greater reliance on data matching
– increased importance of maintaining clear records
If you’re unsure whether your business needs to lodge an FBT return, or whether your current
treatment is correct, getting advice early can prevent costly corrections later.
Need help reviewing your FBT exposure?
If you’d like help working through your FBT obligations for the 2026 FBT year — including vehicles,
employee benefits, reimbursements, and exemptions — our team can assist with:
– identifying fringe benefits you may not have considered
– calculating taxable values
– preparing and lodging FBT returns
– supporting records and documentation requirements
If you have any questions, please reach out to our team of accountants at support@walkerhill.com.au.
