What is FBT, and when is the last date to file it?
Fringe benefit tax (FBT)
Fringe benefit tax is the tax paid by employers for the additional benefits (non-cash perks) that they provide to their employees, which doesn’t include their income.
The FBT was introduced in 1986 to monitor and regulate salary packages. The salary packages back then included a range of tax-free benefits that included cars, travel, restaurant coupons, property and much more.
The fringe benefit tax is calculated as 47% of the taxable value of the benefit.
The period from 1st April to 31st March of the next year is the period for which the FBT is calculated.
Why was it introduced?
- Equal tax has to be paid by everyone: When an employer tries to compensate their employee through any tax-free perks, these benefits also have to be taxed. FBT ensures that employees cannot pay less tax because they receive part of their salary as compensation.
- Benefits equal to salary: The FBT assures that the additional benefits are taxed equally as salary or wages given to the employees. So you can’t avoid or reduce the pay-as-you-go withholding.
What falls under Fringe benefits?
- Company cars that are used for personal purposes, which also include car parking.
- Low-interest loan provided exclusively to employees.
- Memberships, which might include memberships for the gym and other associations.
- Employers sponsoring a club activity or a holiday package.
- The debt of the employee is waived off.
- Personal bills of employees that are paid by employers.
- Employers pay allowances to employees who live away from home.
- Meal entertainment, including meals and other hospitality services.
- Companies give properties such as goods or assets at no cost or at a discount.
What doesn’t fall under Fringe Benefits?
- An electronic device that is portable
- Computer software
- Protective clothing
- Briefcase
- Tool of trade
What are the recent changes in FBT since May 2025?
Choice to use existing records: Employers will have the option to use existing records in place of statutory evidentiary documents from 1st April 2024. This might include travel diaries or employee declarations and is subject to the commissioner of taxation’s decision.
Plug-in hybrid EVs: From 1st April 2025, plug-in hybrid vehicles are no longer eligible for the electric car exemption under FBT law.
Benchmark interest rate: The FBT benchmark interest rate was 8.77% from March 2025 to April 2025, and it will be changed to 8.62% from 31st March 2026.
The timeline for the Fringe Benefit Tax Schedule
- The employers should account for the benefits they provided to their employees from 1st April 2025 to 31st March 2026.
- The employers need to lodge their FBT returns by 21st May 2026, and pay any tax liability by that date.
- If the business or the employer is filing the tax through a registered tax agent, then they get an extension to pay by 25th June 2026.
The year-end work begins after March 31st, and accounting firms start collecting benefit details, determining the taxable values, reviewing for any exemptions, checking for compliance, and preparing the FBT return.
After which, the FBT returns are lodged, and the tax amount is paid by the employer to the ATO.
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