A Reminder for Employers as the FBT Year Draws to a Close
Fringe Benefits Tax (FBT) operates on a different reporting cycle to the standard income tax year. Instead of running from 1 July to 30 June, the FBT year runs from 1 April to 31 March.
With 31 March 2026 approaching, now is a good time for employers to review any benefits provided to employees during the current FBT period and ensure the correct reporting and compliance requirements are met.
Understanding Fringe Benefits Tax
Fringe Benefits Tax is a tax paid by employers on certain non-cash benefits provided to employees or their associates (such as family members).
Unlike income tax, which employees pay on their wages or salary, FBT is paid by the employer based on the value of the benefit provided.
These benefits—often referred to as employee perks—may include:
- Use of a company car
- Subsidised gym memberships
- Car parking
- Entertainment expenses
- Accommodation costs
- School fee payments
However, some items are not considered fringe benefits, including:
- Regular salary or wages
- Approved employee share scheme benefits
- Employer superannuation contributions
Guidance from the Australian Taxation Office (ATO) explains which benefits fall within the FBT rules and which may qualify for exemptions or concessions. In some situations, benefits that would normally attract FBT may be excluded.
Calculating the Taxable Value of Benefits
Once employers identify which benefits are subject to FBT, they must determine the taxable value of each benefit.
This is typically done by “grossing up” the value of the benefit. Grossing-up adjusts the value to reflect the amount of salary an employee would need to earn (before tax) to purchase the benefit themselves.
Two gross-up rates apply:
- 2.0802 – when the employer can claim a GST credit for the benefit
- 1.8868 – when no GST credit is available
Where a GST credit is available, the taxable value of the benefit is multiplied by 2.0802, and the FBT rate of 47% is applied to determine the amount payable.
Employers must then lodge an FBT return and pay any tax owed for the year.
Potential Tax Deductions for Employers
While FBT adds an additional compliance requirement, there may also be tax benefits for businesses.
In many cases, employers who pay FBT can:
- Claim an income tax deduction for the amount of FBT paid
- Claim a GST credit for the benefit provided (where applicable)
- Claim a tax deduction for the cost of providing the fringe benefit
Eligibility for these deductions depends on the specific circumstances and how the benefit is structured.
Preparing for FBT Lodgment
Because the FBT year ends on 31 March, employers should review their records and confirm all employee benefits provided during the year.
Key FBT lodgment deadlines include:
- 21 May – for employers who prepare and lodge their own FBT return
- 25 June – if the return is lodged through a registered tax agent, provided the employer is registered as an FBT client by 21 May
Reviewing benefits early can help ensure accurate reporting and reduce the risk of errors or missed obligations.