With the end of the FBT year fast approaching on 31 March 2026, now is the time for employers to review benefits, confirm records, and plan any last‑minute actions. Careful planning can help ensure you achieve the best outcome.
Review employee benefits
FBT can apply to a wide range of benefits provided to employees or their associates, such as company cars, car parking, loans, entertainment, and expense reimbursements. A practical first step is to confirm whether you’ve provided a fringe benefit during the year. Consider:Have any fringe benefits been provided?
- This ATO Link provides detailed examples of what is and isn’t considered a fringe benefit.
- Are any benefits provided eligible for exemptions or concessions?
- For example, certain work-related items, minor benefits and (for eligible cars) the EV exemption.
- Have you maintained logbooks and odometer records for vehicles?
- For the operating cost method, keep a compliant 12week logbook (valid for up to five years) and capture opening and closing odometer readings on 1 April and 31 March each year.
- Can any benefits be restructured to reduce FBT liability?
- For example, choosing an optimal meal entertainment valuation method (actual, 50/50 or 12week register) based on your records and attendees. [ato.gov.au]
Electric vehicle (EV) exemptions: what changed and what still applies
The EV FBT exemption remains available for eligible battery electric and hydrogen fuel cell cars (and associated running costs) where the first time the car is both held and used is on or after 1 July 2022, provided LCT has never been payable on the car. Private use under salary packaging and novated leases can qualify.However, plug‑in hybrid electric vehicles (PHEVs) are no longer considered zero or low emissions vehicles from 1 April 2025 and generally do not qualify for the exemption in the 2025–26 FBT year.
Note – A limited transitional rule applies only if the PHEV was used or available for private use before 1 April 2025 and there was a financially binding commitment made before that date to continue providing private use on and after 1 April 2025. IMPORTANTLY – Changes or new commitments on or after 1 April 2025 will usually end the exemption. Refinancing a PHEV is considered a change and will end the exemption for that vehicle.
Action: Review fleets and novated lease arrangements to confirm which vehicles remain exempt vs taxable from 1 April 2025 onward, and whether any post‑1 April 2025 variations have inadvertently ended a transitional PHEV exemption.
Tip – EV home charging: If employees pay for home electricity and you’re using the operating cost method, the ATO’s EV home charging rate (currently 4.20 cents/km for eligible years) can be used to work out electricity costs associated with charging.
Timing and action
The FBT year ends on 31 March. If you haven’t already, employers should act promptly to:
- Maintain accurate records for all employee benefits
- Confirm which benefits are reportable on payment summaries or Single Touch Payroll
- Complete logbooks and mileage/odometer records for each vehicle used by employees.
- Review novated leases, employee loans and car parking arrangements to confirm valuation methods and any exemptions.
- Check if Fringe benefits can be restructured before year-end to reduce exposure (for example, entertainment calculation method).
- Have employee FBT declarations completed and signed by employees receiving fringe benefits
- Engage an advisor to model your potential FBT liability and assess mitigation options
- Have your advisor Lodge an FBT return – even if the value of your fringe benefits has been reduced to nil from being cashed out by employee contributions.
Practical steps
- By taking these steps now, employers can ensure compliance, minimise unnecessary tax costs and take full advantage of available exemptions.
If you would like support reviewing your FBT exposure or planning for the 2025–26 year, our team can provide practical guidance tailored to your business.
