Fringe Benefits Tax (FBT) 2025: What You Need to Know

As the Fringe Benefits Tax (FBT) season approaches, businesses must ensure they are prepared to meet their obligations and avoid unnecessary scrutiny from the Australian Taxation Office (ATO). To assist, we have put together a comprehensive guide to FBT 2025, including key due dates, ATO focus areas, and what businesses need to do to stay compliant.

What is Fringe Benefits Tax (FBT)?

FBT is a tax paid by employers on certain benefits provided to employees, their families, or associates in place of salary or wages. Common examples include:

• Company cars that are used for private purposes
• Entertainment expenses (e.g., Christmas parties, meals, events, and holidays)
• Loan benefits
• Housing and accommodation benefits
• Employee expense payments

FBT is separate from income tax and is calculated based on the taxable value of the fringe benefits provided.

FBT Due Dates for 2025

For the FBT year running from 1 April 2024 to 31 March 2025, the following deadlines apply:

• 21 May 2025 – Lodgment and payment deadline for FBT returns if lodging by paper.
• 25 June 2025 – Lodgment and payment deadline if using a registered tax agent (to qualify, the return must be lodged electronically by this date).

New Exemptions for FBT 2025

This year, the government has introduced new exemptions, including:

• FBT Exemption on Electric Vehicles (EVs) – Eligible electric vehicles (EVs) provided to employees for private use may be exempt from FBT, provided they meet specific criteria. To qualify:
  • The EV must be first held and used on or after 1 July 2022.
  • It must be a zero or low-emission vehicle (battery electric, hydrogen fuel cell, or plug-in hybrid electric vehicle).
  • The car’s original value must be below the luxury car tax threshold for fuel-efficient vehicles.
• Increased Threshold for Minor Benefits Exemption – Minor, infrequent, and irregular benefits valued under $300 continue to be exempt from FBT, but additional guidance on what qualifies has been introduced.

ATO Target Areas for FBT 2025

Each year, the ATO focuses on specific areas of potential non-compliance. For 2025, key areas include:

1. Motor Vehicle Use – Ensuring employers correctly report personal use of company vehicles, particularly in businesses with high fleet usage.
2. Employee Entertainment – Scrutiny on meal and event expenses that may not be correctly classified as deductible or FBT-exempt.
3. Salary Packaging Arrangements – Ensuring that salary sacrifice arrangements comply with FBT regulations.
4. Car Parking Benefits – Reviewing whether businesses are correctly assessing and reporting car parking fringe benefits.
5. Work-Related Expenses – Checking claims for work-related reimbursements and whether they qualify for exemptions [known as the otherwise deductible rule].

The Importance of a Motor Vehicle Policy and Logbooks

For businesses providing motor vehicles to employees, having a written motor vehicle policy and maintaining logbooks is critical to minimising FBT liability. Here’s why:

• Clear Usage Guidelines – A documented policy helps define personal versus business use, ensuring employees understand restrictions on private vehicle use.
• ATO Compliance – A logbook is essential for substantiating claims related to business use, reducing the taxable value of the benefit.
• Reduced FBT Liability – Accurately recorded logbook entries can lower the FBT payable by providing proof that a vehicle is primarily used for work purposes.
• Record-Keeping Requirements – The ATO requires logbooks to be maintained for a continuous 12-week period every five years or when there are major changes in vehicle usage.

What Businesses Need to Do

To ensure compliance and avoid penalties, businesses should take the following steps:

• Review Employee Benefits – Conduct an internal review of benefits provided to employees and determine whether they attract FBT.
• Maintain Accurate Records – Keep detailed records of fringe benefits, including logbooks for car use and receipts for entertainment expenses.
• Consider Exemptions and Concessions – Certain benefits, such as work-related travel and minor benefits under $300, may be exempt.
• Use the Right Valuation Methods – Ensure benefits are valued correctly using the appropriate ATO-approved calculation methods.
• Lodge on Time – Avoid late lodgment penalties by ensuring FBT returns are completed and submitted by the due dates.
• Seek Professional Advice – Engage with a tax professional to review your FBT position and take advantage of available exemptions or deductions.

Final Thoughts

FBT compliance is an essential part of business tax obligations. With the ATO increasing its focus on certain fringe benefits, now is the time to review your records, ensure accurate reporting, and implement best practices for FBT management.

If you need assistance with your FBT obligations, speak to your tax advisor to ensure you're meeting all compliance requirements while optimizing tax outcomes for your business.