As the Fringe Benefits Tax (FBT) year for 2024–25 comes to a close on 31 March, many Australian businesses are reviewing their obligations. Understanding your FBT responsibilities not only helps with compliance but can also improve your cash flow and employee engagement strategies.
This guide covers what counts as a fringe benefit, car-related FBT rules, the minor benefits exemption, entertainment expense treatments, reportable fringe benefits, and return lodgment deadlines. It’s designed to support small and medium-sized businesses looking for clarity ahead of the FBT year-end.
What Is a Fringe Benefit?
Fringe benefits are non-cash benefits provided to employees or their associates outside of regular salary and wages. Common examples include:
- Private use of company vehicles
- Gym memberships or wellness allowances
- Staff parties and social events
- Employee loans or debt forgiveness
- Housing or accommodation benefits
These benefits may attract FBT and should be carefully assessed each year.
Car Fringe Benefits and Electric Vehicle Exemptions
If your business provides vehicles that employees use for personal reasons — even occasionally — it’s likely you need to pay FBT. There are two main methods to calculate car FBT:
- The statutory formula method applies a flat 20% of the car’s base value.
- The operating cost method uses actual costs and a logbook to calculate private versus business use.
To reduce FBT liability, businesses should maintain a valid logbook (updated every five years) and ensure odometer readings are taken at 31 March.
Electric Vehicle FBT Exemption
Electric vehicles that meet the criteria may be exempt from FBT. To qualify:
- The car must be a battery electric, hydrogen fuel cell, or plug-in hybrid vehicle.
- It must have been first held and used after 1 July 2022.
- It must have cost less than the fuel-efficient luxury car tax threshold at the time of purchase.
- It must be provided to a current employee or their associate.
From 1 April 2025, plug-in hybrid vehicles will no longer qualify for this exemption unless there was a pre-existing commitment. Battery EVs and hydrogen-powered vehicles will still be eligible.
Minor Benefits Exemption: Stay Under $300
The minor benefits exemption remains unchanged for the 2024–25 FBT year. To qualify, a benefit must:
- Have a taxable value of less than $300 (including GST)
- Be provided infrequently and irregularly
- Be unreasonable to treat as a fringe benefit
Be cautious about frequency. While a one-off gift card under $300 might be exempt, a regular monthly voucher, even if under the threshold, may attract FBT due to its regularity. Also, if an employee receives multiple minor benefits across the year, the total value may result in FBT being applied.
How Entertainment Expenses Are Treated
Entertainment benefits are one of the most misunderstood areas of FBT. This includes meals, drinks, tickets to events, and staff parties.
If entertainment is provided to employees or their associates, FBT will generally apply. You can use either the 50/50 split method or the actual cost method to calculate your liability.
Common FBT Entertainment Exemptions
- Minor benefit exemption if cost per head is under $300 and the event is infrequent
- In-office food and drinks on business premises during workdays
- Taxi travel to or from the workplace for events
Entertainment provided solely to clients is not subject to FBT, but it’s not tax deductible and GST credits cannot be claimed. Clear distinction in recordkeeping between client and employee entertainment is crucial.
Note on Proposed Changes
While there is a proposed policy to introduce a $20,000 tax deduction cap for meal and entertainment expenses for small businesses, it is not yet law and does not apply to the 2024–25 FBT year.
Reportable Fringe Benefits: What You Need to Declare
If the total taxable value of fringe benefits provided to an employee exceeds $2,000 in a year, it must be reported on their income statement.
Key details:
- The threshold remains at $2,000 for the 2024–25 FBT year
- The grossed-up value using the Type 2 rate (1.8868) must be reported
- Certain benefits are excluded from reporting (e.g. remote housing, shared cars), but most taxable benefits are included
Electric vehicle benefits may still need to be reported even if exempt from FBT, as they are still provided in respect of employment.
Reporting affects employees’ eligibility for government benefits and liabilities, including HELP repayment, family tax benefits, Medicare levy surcharge, and more. Reporting should be finalised by 14 July in line with STP obligations.
FBT Lodgment and Payment Deadlines for 2024–25
Be sure to meet these key FBT deadlines:
- 21 May 2025 – Lodgment and payment deadline for businesses lodging their own FBT return
25 June 2025 – Deadline if using a registered tax agent and lodging electronically (provided the agent was appointed by 21 May)
If you’re registered for FBT but don’t need to lodge, you should submit an FBT non-lodgment advice by 21 May to avoid ATO follow-up.
Summary
The FBT landscape remains largely stable for 2024–25, but that doesn’t mean it should be overlooked. To recap:
- Review use of company cars and consider the EV exemption
- Track low-value perks and keep them under $300 per benefit
- Understand how entertainment expenses affect FBT and deductions
- Ensure employee reportable benefits are correctly recorded
- Lodge returns or submit non-lodgment advice by the deadlines
With proactive planning and accurate recordkeeping, your business can reduce its FBT liability and avoid unexpected tax issues. If you’re unsure about your obligations or want to optimise your FBT position, now’s the time to seek expert advice.