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FBT Education

Fringe benefits tax in Australia: what you need to know and how to stay compliant

Published: 28 Apr 2025

   

Julie Abdalla speaks at the Senate Hearing

Fringe benefits tax (FBT) is a critical but often misunderstood area of Australian taxation. It applies to certain benefits provided by employers to employees in place of salary or wages. With FBT lodgements due by 21 May, now is the time for businesses and professionals to refresh their understanding of FBT obligations, avoid compliance risks, and ensure accurate reporting.

 

What is fringe benefits tax (FBT)?

FBT is a tax imposed on employers for certain benefits they provide to employees, their families, or associates. It is separate from income tax and is calculated based on the taxable value of the benefits provided. The legislation governing FBT is outlined in the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986).

Common examples of fringe benefits include:

  • Company cars available for private use.
  • Entertainment expenses including meals, tickets, and leisure activities.
  • Salary packaging arrangements involving benefits instead of direct salary.
  • Discounted loans provided to employees.
  • Housing benefits such as rent or mortgage assistance.

Employers must calculate their FBT liability based on the taxable value of the benefits provided and lodge an FBT return with the Australian Tax Office (ATO) if they have an FBT liability. The FBT year runs from 1 April to 31 March, with lodgement and payment due by 21 May each year.

 

Why FBT compliance matters for employers

For businesses, failing to comply with FBT regulations can result in significant penalties and interest charges. The ATO regularly conducts FBT audits, particularly focusing on benefits such as motor vehicles, employee expense reimbursements, and entertainment expenses. Employers must maintain accurate records, correctly calculate their FBT liability, and report benefits appropriately to avoid compliance risks.

Many businesses struggle with identifying what constitutes a fringe benefit and applying the correct valuation and exemptions. Some benefits may be exempt from FBT, such as work-related items like laptops or mobile phones, while others may qualify for concessional treatment, such as minor benefits under $300. Understanding these rules is key to minimising FBT liability.

For tax professionals and finance teams, keeping up to date with FBT legislation changes and best practices is essential for advising clients and ensuring compliance.

 

Learn how to correctly identify and calculate FBT

For professionals looking to develop a practical understanding of FBT, the Taxation of fringe benefits unit offers a structured, 10-hour online learning experience. This Tax Academy micro credential provides the knowledge required to determine when a fringe benefit arises, how to calculate its taxable value, and how to apply FBT legislation accurately.

 

What you will learn

✔ Identify when a fringe benefit arises and determine its type.
✔ Calculate the taxable value and FBT payable on common fringe benefits.
✔ Understand employer reporting obligations under the FBT regime.
✔ Explain how the FBT regime interacts with the GST system.

Unit details

  • Level: Professional
  • CPD: 10 hours
  • Assessment:
    • Part 1: 20 multiple-choice questions (60 minutes, 75% pass mark, two attempts permitted).
    • Part 2: Six scenario-based multiple-choice questions (45 minutes, 80% pass mark, two attempts permitted).
  • Assumed knowledge: A fundamental understanding of the GST regime is recommended.

Upon successful completion of this unit, you will earn a verifiable digital badge, which you can showcase on your LinkedIn profile, CV, or email signature to demonstrate your expertise. This badge provides trusted validation of the unit completion and helps distinguish you in the industry.

 

Who should take this unit?

This unit is ideal for:

  • Employers seeking to understand FBT obligations and avoid costly errors.
  • Accountants and finance professionals responsible for FBT calculations and compliance.
  • Tax professionals and advisors looking to strengthen their knowledge in fringe benefits taxation.
  • HR and payroll managers involved in salary packaging and employee benefits reporting.

By gaining practical, real-world knowledge, professionals can confidently apply FBT rules, reduce tax exposure, and ensure compliance.

Find out more about the Taxation of fringe benefits unit.