The Australian Taxation Office (ATO) continues to prioritise compliance with fringe benefits tax (FBT), using data-matching and risk-based reviews to reduce the FBT gap and correct non-compliance. Employers should be aware that vehicle benefits and related documentation are key areas of scrutiny going into the 2026 FBT year.
The ATO’s own guidance highlights the importance of lodging accurate returns and keeping thorough records, particularly where employer-provided vehicles are involved. They analyse third-party data to identify employers who may have under-reported or failed to lodge an FBT return at all.
Key Audit Risk Areas
- Motor vehicles: Incorrect logbooks, private use records and exemptions are frequent triggers for review.
- Record-keeping and reporting: Poor documentation, missing returns or mismatches between records and lodgements can lead to compliance checks.
- Benefit classification: Misclassifying benefits or incorrectly applying exemptions may attract ATO attention.
These risk areas reflect the ATO’s broader compliance strategy of analysing data, issuing reminders and, where necessary, selecting employers for review to ensure correct reporting and lodgement.
What Employers Should Do
Proactive reviews and robust documentation remain the best defence against FBT audit risk:
- Review vehicle benefits and ensure logbooks and use claims are compliant.
- Maintain accurate records of employee declarations, receipts and supporting documents.
- Lodge returns on time, even if the liability is nil to avoid penalties.
For detailed guidance, including FBT valuation and reporting requirements, see the ATO’s official information Fringe benefits tax (FBT) | Australian Taxation Office or speak with one of our team.
