Stay Ahead of FBT

Key Areas to Review Before 31 March 2026

The Fringe Benefits Tax (FBT) year ends on 31 March 2026, so now is the time to review any additional benefits you’ve provided to employees or associates.

FBT can apply to benefits you provide beyond salary or wages, such as vehicles, entertainment, car parking, paying personal expenses, or providing goods or accommodation. If these aren’t managed properly, they can create unexpected tax and compliance issues.

Motor Vehicles Provided to Employees

Providing vehicles to employees is one of the most common FBT triggers.

If an employee has access to a company car, FBT can apply even if it’s mainly used for work. In particular, if the car is kept at an employee’s home, it’s generally considered available for private use.

There are two main ways to calculate FBT: the statutory method (based on 20% of the car’s value) or the operating cost method, which relies on a valid logbook. If you’re using a logbook, make sure it has been kept in the last 5 years, and it still reflects current usage patterns. We suggest a tracking app like Driversnote to help you compile your 12-week logbook.

Before 31 March, don’t forget to record odometer readings. Also, keep in mind that employee contributions, such as paying for fuel, can reduce the FBT liability, but only if they’re properly tracked. 

The ATO continues to focus on logbooks and private use, particularly where vehicles are garaged at home.

Electric Vehicles (EVs)

Electric vehicles (EVs) can be exempt from FBT when provided by an employer to an employee as a car fringe benefit (not when purchased personally).

To qualify, the EV must be a battery electric, hydrogen, or eligible plug-in hybrid (PHEV), first held and used on or after 1 July 2022, and below the luxury car tax (LCT) threshold for fuel-efficient vehicles. PHEVs only qualify if first provided before 1 April 2025.

The exemption covers the car and associated running costs, including charging. While no FBT is payable, employers must still calculate and report the benefit through Single Touch Payroll.

Entertainment and Gifts for Staff

Providing meals, events, or gifts is a great way to build culture, but the FBT treatment can vary depending on how the benefit is structured.

Entertainment, such as meals, drinks, or social events, can give rise to FBT, although exemptions may apply in some cases, such as minor benefits or certain on-site meals. Non-entertainment gifts, such as hampers or gift cards, are generally easier to manage and may be exempt if they are under $300 and considered minor in the circumstances.

What about Business Lunches and Staff Functions?

A common trap is business lunches. Even where there is a genuine business purpose, off-site meals are usually treated as entertainment. This means the employee portion can still be subject to FBT, even if clients are present. Simply calling a lunch or dinner a business meeting doesn’t change the FBT treatment.

For staff functions, the outcome depends on factors like whether the event is on-site or off-site, when it’s held, and the cost per person. Small changes, like moving off-site or exceeding the $300 threshold, can affect the result, so it is always best to get advice if you are planning a big staff function.

Loans, Expense Payments, Goods and Accommodation

FBT can also arise where you provide loans, pay personal expenses, or provide goods or accommodation to employees.

Loans to employees must have interest charged at the ATO benchmark interest rate to ensure FBT is not triggered. Expense payments and goods may be exempt if they would have been tax-deductible to the employee, but this needs to be assessed carefully.

Car parking is another area that’s often missed. Where you pay for or provide parking at a commercial facility, this can trigger FBT and should be reviewed. Accommodation and housing benefits also have specific valuation rules and can create significant exposure if not structured correctly.

Where We’re Seeing Clients Get It Wrong

The most common issues we see are assuming no FBT applies because something is “mostly business,” relying on outdated logbooks, or incorrectly treating entertainment and reimbursed expenses.

FBT isn’t just a year-end exercise; it requires ongoing attention throughout the year. Businesses that assume it doesn’t apply, particularly smaller ones, are often the ones caught out.

FBT Action Checklist

We recommend you review your FBT risk before 31 March 2026, using the following table to help:

Area	Action Item
Motor Vehicles	Review company vehicles provided to staff
	Ensure odometer readings are captured as at 31 March 2026
	Check for valid and current logbooks
	Identify any employee contribution calculations required and consider any expenses paid personally by the employees
	Review electric vehicle eligibility and reporting requirements
Entertainment & Gifts	Review entertainment and gift expenditure for FBT implications
	Consider the minor benefits exemption where appropriate
	Keep records of costs, recipients, and benefit types
	Assess staff functions (location, cost, attendees) individually
Loans & Expenses	Check for employee loans and whether interest has been charged
	Review reimbursed personal expenses or expenses paid on an employee’s behalf for deductibility
General	Review all benefits for potential FBT liability
	Ensure all FBT reporting and calculations are completed by 31 March

Let Us Help You Stay Ahead of FBT

FBT is often overlooked, but it can lead to unexpected costs if not managed properly.

If you’re a practice owner, it’s also an opportunity to structure benefits more effectively, not just a compliance exercise.

If you’re unsure how FBT applies to your situation, our team at GrowthMD can help you identify both risks and planning opportunities.