Australia Fringe Benefits Tax Guide
the Australian Fringe Benefits Tax (FBT). The guide covers: the FBT rate of 47% — the FBT is imposed on the employers at the rate of 47% of the "grossed-up taxable value" of the fringe benefits provided to the employees (the "grossed-up taxable value" is the value of the benefit plus the FBT that the employer would pay); the FBT rate is tied to the top marginal rate plus the Medicare levy (45% + 2% = 47%); the FBT year runs from 1 April to 31 March (the "FBT year" — NOT the income year); the car fringe benefits (the "car FBT") — the car fringe benefit arises when the employer provides the car to the employee for the private use (the "car fringe benefit"); the taxable value of the car fringe benefit is calculated under two methods: (a) the statutory formula method — the taxable value is: (the "base value" of the car) x (the "statutory percentage" based on the kilometres travelled); the statutory percentage for the 2025-26 FBT year is 20% (reduced from the previous rates of 26% to 11% based on the kilometres); from 1 April 2023, the statutory rate was reduced to a flat rate of 20% regardless of the kilometres travelled; (b) the operating cost method — the taxable value is: (the "operating costs" of the car) x (the "private use percentage" of the car); the operating costs include: the fuel, the registration, the insurance, the repairs, the depreciation, and the interest; the employer must maintain the "logbook" (the "logbook records") for at least 12 consecutive weeks every 5 years to establish the business use percentage; the exempt benefits (the "exempt fringe benefits") — the following benefits are exempt from the FBT: (a) the work-related items (the "work-related items" — the portable electronic devices used primarily for the work, the computer software, the tools of the trade, the briefcases, the protective clothing, the first aid kits); the exemption is limited to ONE item per employee per year for the substantially identical items (the "one item per year rule"); (b) the minor benefits (the "minor benefits exemption") — the benefits valued at less than $300 (the "minor benefits threshold") that are provided infrequently and are not part of a salary sacrifice arrangement; (c) the car parking — the car parking provided by the employer to the employee at the employer's premises is exempt from the FBT (the "car parking exemption") if the commercial parking station within a 1 km radius charges less than the "car parking threshold" (the threshold for the 2025-26 FBT year is $10.83 per day); (d) the health and wellness benefits — the benefits provided for the health and the wellness of the employees (the "health and wellness benefits" — the gym memberships, the health checks, the flu shots, the employee assistance programs) are exempt if the benefit is provided on the employer's premises or is related to the health screening; (e) the relocation benefits — the benefits provided to the employees who are required to relocate (the "relocation benefits") are exempt up to the limit of the "removal and storage" costs and the "accommodation costs" for the temporary accommodation; (f) the employee share scheme discounts — the discounts on the shares provided under the employee share scheme (the "ESS") are exempt from the FBT; the otherwise deductible rule (the "otherwise deductible rule") — the taxable value of the fringe benefit is reduced by the amount that the employee would have been able to claim as a deduction if the employee had paid for the benefit personally; the otherwise deductible rule applies to: (a) the car fringe benefits (the business use portion), (b) the loan fringe benefits (the portion of the interest that would be deductible), (c) the expense payment fringe benefits (the portion of the expense that would be deductible); the reportable fringe benefits (the "reportable fringe benefits") — the fringe benefits with the total grossed-up taxable value of $2,000 or more per employee per FBT year are reportable (the "reportable fringe benefits amount" — the "RFBA"); the RFBA is reported on the employee's payment summary (the "income statement") and is used for: (a) the Medicare levy surcharge calculation (the income for the MLS purposes includes the RFBA), (b) the superannuation contribution cap calculation (the income for the concessional cap purposes includes the RFBA in some cases), (c) the reduction of the tax-free threshold for the higher-income earners; the FBT return lodgement (the "FBT return") — the employer must lodge the annual FBT return (the "FBT return" — the form "Fringe Benefits Tax Return") by the 21 May following the end of the FBT year (the FBT year ends on 31 March); the employer can apply for the "FBT instalments" (the quarterly payments of the estimated FBT liability) to avoid the large FBT payment in May. All amounts in Australian Dollars (AUD). For related reading, see our Personal Tax Guide → and Starting a Business Guide →.
Car FBT — Calculation Methods
- Statutory formula (flat 20%): The taxable value = (the base value of the car) x 20%. The base value is the cost price of the car (including the GST and the dealer delivery charges but excluding the registration and the stamp duty). The statutory rate is a flat 20% from 1 April 2023, regardless of the kilometres travelled. The employee can reduce the taxable value by the "employee contribution" (the amount the employee pays towards the private use of the car).
- Operating cost method: The taxable value = (the operating costs of the car) x (the private use percentage). The employer must maintain the logbook for 12 consecutive weeks every 5 years. The logbook must record: the date of each journey, the start and the end time, the kilometres travelled, the purpose of the journey. The business use percentage is applied to the operating costs to calculate the taxable value.
For the FBT on the car parking and the reportable fringe benefits, see our Personal Tax Guide →.
Exempt Benefits
- Minor benefits ($300): The benefits valued at less than $300 that are provided infrequently and are not part of a salary sacrifice arrangement are exempt. The "infrequent" test is based on the number of times the benefit is provided in the FBT year (generally not more than once or twice per year). The salary sacrifice arrangement excludes the benefit from the exemption.
- Work-related items: The electronic devices (the laptops, the tablets, the mobile phones, the calculators, the software) used primarily for the work are exempt. The exemption is limited to one item per employee per year for the substantially identical items. The employee must use the item primarily for the employment purposes (more than 50% for the work).
For the FBT return lodgement and the FBT instalments, see our Starting a Business Guide →.