If you’re a business that employs staff, it’s time to consider what fringe benefits you’ve provided to employees during the Fringe Benefits Tax [FBT] year. Unlike the financial year, the FBT year runs from 1 April 2024 – 31 March 2025 and FBT continues to be an area of focus for the Australian Taxation Office [ATO].  

Here’s what you need to know to ensure your business meets its tax obligations.

 

what is a fringe benefit? 

A fringe benefit is any non-cash benefit you have provided to your employees, that is deemed to be of a private nature and is not part of their wages. 

 

who does it apply to? 

A fringe benefit can be provided to employees, contractors and directors.

Fringe benefits may also be provided to your staff by third party organisations. For example, if one of your sales staff receives a non-cash reward from a third party for being the best seller of their products in a quarter, you as the employer may need to pay FBT on the reward!

 

most common fringe benefits 

The common types of benefits we see are:

  • Provision of cars to employees [ensure the correct vehicle classification to avoid FBT errors!]
  • Entertainment such as lunches, after-work drinks, Christmas parties or corporate boxes
  • Gift cards and anniversary gifts
  • Payment of private expenses on behalf of employees  [can include a portion of expenses like phone bills]
  • Provision of car parking to employees

 

ATO guidance on motor vehicles and compliance

Employers often misclassify vehicles, leading to incorrect FBT calculations. The ATO has outlined three categories of vehicles:

  1. Cars – designed to carry fewer than nine passengers, including the driver.
  2. Dual-cab utes + vehicles under one tonne capacity – often misunderstood; FBT still applies unless specific exemptions are met.
  3. All other vehicles with a carrying capacity over one tonne – not classified as cars but still subject to FBT.

Misreporting private vs. business use is another key risk area. Just because a vehicle is used for work does not automatically exempt it from FBT.

Common mistakes with logbooks:

  • Logbooks must contain sufficient detail, including start and end dates, odometer readings, distance, and a clear purpose for each trip.
  • Entries like “business trip” are not sufficient—more detail is required.
  • Discrepancies between logbooks and actual odometer records may result in the logbook being invalidated.

If you provide any of these benefits to employees, you will need to consider whether that benefit results in an FBT liability. In some cases, you can use employee contributions to eliminate the FBT liability. We can help determine this with you.

 

when do you need to lodge an FBT return? 

If the benefits that you provide to employees do result in an FBT liability, lodging an FBT return is a requirement. For the 2025 FBT year, your return must be lodged:

  • On or before 25 June 2025 if lodged electronically via a tax agent
  • On or before 21 May 2025 if lodging yourself.

 

We still recommend lodging an FBT return if the liability is reduced to nil either by employee contributions or the application of relevant exceptions and exemptions.

Why? The ATO can obtain data from a variety of sources to identify businesses that may not be meeting their FBT obligations. Failure to report could result in  penalties and interest.

 

how can I reduce my FBT liability? 

There are a few common exemptions that might apply to your business. These are:

 

minor benefits

Costing less than $300 including GST per person and provided on an infrequent and irregular basis [E.g. Christmas hampers which generally cost less than $300 per person and only occur once a year].

 

how often is ‘minor’ and ‘infrequent’ when applying the minor benefits exemption?

While there is no definitive legislation covering this, we recommend limiting the occurrences to less than 10 as a guideline.

 

otherwise deductible costs

Expenses that would be tax-deductible to the employee if they incurred it directly [E.g. Income Protection Insurance or training courses related to their employment].

 

portable electronic devices

Devices provided primarily [E.g. over 50%] for the purpose of enabling the employee to do their job [E.g. iPads, laptops + mobile phones].

 

exempt vehicles

Vehicles that are not principally designed for the purpose of carrying passengers [eg vans, utes, trucks] may be exempt only if private use is minor, infrequent, and irregular.

 

what are some notable risk areas for the 2025 FBT year? 

 

record keeping requirements

The ATO has tightened guidelines on record-keeping to ensure businesses can justify FBT claims. Employers must maintain:

  • Employee declarations of private use
  • Detailed logbooks for motor vehicles [the ATO now requires more detailed trip purposes]
  • Receipts for entertainment/meal expenses, including the staff and clients who attended

 

utes + work vehicles

Just because a vehicle might be used for work purposes does not mean it’s exempt from FBT by default.  Employers must correctly classify vehicles and document usage.

Logbook issues – the ATO has found errors such as:

  • Business and private travel incorrectly combined as a single entry
  • Logbooks showing unrealistic distances [eg a 50km journey recorded as 150km]
  • Significant odometer discrepancies, suggesting underreporting of private use.

 

car charging stations for electric vehicles

If an employer installs a charging station in an employee’s home, this is subject to FBT. This is the case even if the electric vehicle itself is exempt from FBT!

 

independent contractors

A key focus are of the ATO. If benefits are provided to contractors who should be classified as employees, the benefits can still be subject to FBT.

 

If you’re wondering how these changes might impact your business, get in touch.

 

what you need to do now 

 

If you are a businessDEPOT client that employs staff, look out for our questionnaire [that outlines what you need to consider for the 2025 FBT year] landing in your inbox soon.

If you’re not an existing client but would like some help with lodging your FBT return, give our accounting team a buzz on 1300BDEPOT or oneplace@businessdepot.com.au.

 

In the meantime, please ensure you have recorded your car odometer readings [on all your cars] on 31 March 2025 and that your logbooks have been prepared within the last 5 years. 

 

get more tax insights

If you found this information useful and you’d like to get more information on all things tax related, you can sign up to our mailing box here!