With the end of the 2025/2026 FBT year approaching, it is important for employers to consider whether FBT may apply.
FBT is a tax paid by employers on certain benefits provided to their employees, their families, or other associates.
An employee can include current, future, or past employees, and directors of a company. Sole traders and partners in a partnership are not considered employees, and benefits provided to you are not subject to FBT. It’s separate from income tax and is calculated based on the taxable value of the fringe benefit. As an employer, you self-assess your FBT liability for the FBT year (which runs from 1 April to 31 March). If you have an FBT liability, you must lodge an FBT return and pay the FBT owed.
A fringe benefit is like a payment to an employee but takes a different form than salary or wages. Here are some examples of fringe benefits:
However, certain items are not considered fringe benefits, including:
To calculate FBT, employers “gross up” the taxable value of the benefits provided. This means in effect determining the gross income employees would need to earn (assuming the highest marginal tax rate, including the Medicare levy) to pay for those benefits themselves. The actual FBT paid is 47% of this “grossed-up” value of the fringe benefits.
Example: FBT on a Gym Membership
Jenni, who runs a small consulting firm, provides her employee, Anton, with a gym membership costing $1,100 (including $100 GST).The FBT payable would be calculated based on the grossed-up value of this benefit. This is calculated as follows: $1,100 (taxable value) x 2.0802 (Type 1 gross-up rate) = $2,288.22 (grossed-up taxable value). FBT payable = $2,288.22 x 47% (FBT rate) = $1,075.46.
Employers are required to report (on the employee’s annual income statement) the value of any “reportable fringe benefits” provided to an employee that exceeds $2,000 during an FBT year. This is called a Reportable Fringe Benefits Amount (RFBA).
While employees’ do not pay tax on fringe benefits (as the tax is paid by the employer), RFBAs are used for income testing purposes for the employee and may impact certain government subsidies or payments (e.g. Medicare levy surcharge, childcare subsidy, child support payments).
Calculating your employee’s RFBA:
Using the example above, Antons’s RFBA would be calculated as the value of the reportable fringe benefit multiplied by the type 2 gross up rate:
$1,100 x 1.8868 (Type 2 gross-up rate) = $2,075.48.
An employee’s RFBA is reported as the grossed-up amount of the fringe benefit, as it is meant to reflect the amount of money the employee would have earnt “pre-tax” to pay for the benefit with their post-tax salary.
Here’s a list of the most common exempt benefits under FBT law in Australia:
| FBT exemption | Description |
|---|---|
| Work-related items exempt from FBT | Certain work-related items are exempt from FBT. These include: – Portable electronic devices (such as work laptops, tablets, and mobile phones). – Tools of trade necessary for carrying out employment duties. |
| Minor benefits exemption | The minor benefits exemption applies to certain small benefits provided to employees that are under $300 (GST inclusive) each and provided on an infrequent and irregular basis. |
| Taxi, ride-sharing, and public transport exemptions | Travel by your employees in taxis or ride share services to or from the workplace, or on public transport you operate, may be exempt from FBT. |
| Electric vehicles exemption | You do not have to pay FBT if you provide employees with private use of an electric car that satisfies the below requirements: – The car is a zero or low emissions vehicle (battery electric vehicle and hydrogen fuel cell electric vehicle).* – The first time the car is both held and used is on or after 1 July 2022. – The car is used by a current employee or their associates (such as family members). – Luxury car tax (LCT) has never been payable on the importation or sale of the car. Note: While FBT is not payable on eligible electric vehicles, these benefits are still reportable for RFBA purposes. * From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are no longer considered zero or low emissions vehicles and will not be exempt from FBT. However, existing PHEVs can remain exempt only if BOTH of the following conditions are met: – The PHEV was used or available for private use before 1 April 2025, and that use was exempt; and – There is a financially binding commitment made before 1 April 2025 to continue providing private use on and after this date. |
If you are required to pay FBT and require assistance preparing your FBT return or calculating what’s due, please contact your usual Exant advisor or our expert Nathanael Lee or Jamie Towers via the form below or on 07 3218 3900.
Other relevant Exant Advisory articles relating to FBT include: Christmas parties and staff gifts, Dual cab vehicle exemptions and Private use of business assets
Author: Preethi Pasumarty
Updated date: 13/02/2026 | Original published date: 29/01/2024