What You Need to Know About Fringe Benefits Tax in 2025

Fringe Benefits Tax seems to be one of those accounting terms that never stick. If we had a dollar for “What is FBT again?”, we’d be retiring early 😉

FBT is a tax that employers pay on certain benefits provided to employees in place of salary or wages. Understanding the latest FBT changes and compliance requirements means that you (or we) can minimise their tax liability and avoid penalties.

Key FBT Considerations for 2025

1. FBT Rates and Thresholds

The FBT rate for the 2024–25 FBT year remains at 47%, in line with the top marginal income tax rate. The gross-up rates also remain unchanged:

Type 1 (GST creditable benefits): 2.0802
Type 2 (non-GST creditable benefits): 1.8868

Employers should use these rates when calculating their FBT liability.

For example, if an employer provides a GST-inclusive benefit worth $1000, the taxable value for FBT purposes would be $1,000 × 2.0802 = $2,080.20. The employer then applies the FBT rate of 47% to this amount to determine the final FBT payable.

2. Common Fringe Benefits and Their Implications

Some of the most common fringe benefits include:

Car Benefits – If employees use company vehicles for private purposes, this is subject to FBT. Employers should keep accurate logbooks and consider using the operating cost method to potentially reduce liability.
Entertainment Benefits – Meals, entertainment, and event expenses may be taxable unless they qualify as minor or exempt benefits.
Expense Payment Benefits – Payment or reimbursement of costs including but not limited to, car expenses, gym memberships, health insurance.
Remote Work Benefits – With hybrid work arrangements continuing, benefits such as home office equipment and work-related travel reimbursements need careful review to determine their FBT implications.

3. FBT Exemptions and Concessions

Some benefits are exempt from FBT or receive concessions, including:

Work-related electronic devices – Laptops, phones, and tablets used primarily for work purposes may be exempt.
Minor Benefits – If a benefit is valued at less than $300 and provided infrequently, it may be exempt.
Electric Vehicles (EVs) Exemption – The EV FBT exemption, introduced in 2022, remains in effect in 2025 for eligible zero or low-emission vehicles below the luxury car tax threshold.

4. Record-Keeping and Compliance

The Australian Taxation Office (ATO) continues to focus on compliance, particularly in high-risk areas such as car fringe benefits and entertainment expenses. Employers should:

Maintain accurate records of benefits provided, including logbooks, receipts, and declarations.
Regularly review salary packaging arrangements to ensure compliance.
Use the ATO’s online FBT calculators and tools to estimate liabilities.

Managing FBT tends to fall into the “too complex” basket of business ownership – we can take care of the strategy, compliance and lodgement for you. Give us a buzz if you need any assistance with FBT.