FBT Return Australia: Does Your Business Lodge?

Give an employee a work car they drive on weekends, cover a staff car park, or shout the team a long lunch, and you may have created a fringe benefit without realising it. Fringe benefits tax, or FBT, is the tax that sits on those non-cash perks. Get it wrong and it is one of the easier things for the ATO to spot, because the benefit usually leaves a paper trail in your own accounts.

This guide covers what FBT is, the benefits that most often catch small businesses out, and how to work out whether you need to lodge an FBT return this year. It is written for small business owners and directors across Brisbane and Logan who provide the odd perk and want to know where they stand.

What is fringe benefits tax?

FBT is a tax on certain benefits you give employees, their family, or other associates, in place of or on top of salary and wages. It is paid by the employer, not the employee, and it is separate from income tax.

The logic is straightforward. If your business paid an employee extra cash, that cash would be taxed in their hands. FBT stops a benefit being used to get around that. The current FBT rate is 47%, and it applies to the grossed-up value of the benefit, which is usually higher than the raw cost. That is why an FBT bill can look larger than people expect.

The FBT year is not the same as the income tax year. It runs from 1 April to 31 March. The current FBT year runs from 1 April 2026 to 31 March 2027.

The benefits that most often apply

Most small business FBT exposure comes from a short list of everyday things:

• A work vehicle available for private use, including garaging it at home
• Car parking provided at or near the workplace
• Paying or reimbursing an employee’s private expense, such as a phone bill or school fees
• Entertainment, such as meals out, event tickets or a Christmas party
• Loans to an employee at a low or nil interest rate
• Living-away-from-home allowances

Cars are the big one for most trades and small businesses. If a work ute or van is available for an employee to use privately, not just actually used, a car fringe benefit can arise. The most common method values it at a flat 20% of the car’s base value each year, before gross-up.

When you need to lodge an FBT return

You need to lodge an FBT return for a year if you have an FBT liability, that is, if the taxable value of the benefits you provided is more than nil after any exemptions and reductions.

You do not automatically need to lodge just because you gave a perk. Several rules can reduce the value to nil:

1. The minor benefits exemption. A benefit under $300 in value can be exempt if it is provided infrequently and irregularly. A one-off gift or the occasional team lunch often falls here.
2. The otherwise deductible rule. If the employee could have claimed the expense themselves as a work deduction, the taxable value can be reduced.
3. Work-related exemptions. Some items provided mainly for work, such as a portable device or tools of trade, can be exempt.
4. The electric car exemption. Eligible zero and low emissions cars first held and used from 1 July 2022, and under the fuel-efficient luxury car tax threshold, can be exempt. Note that new plug-in hybrid arrangements stopped qualifying from 1 April 2025.

If, after all that, the value still comes to more than nil, you have an FBT liability and a return is due.

Key dates and paying FBT

The FBT return for the year ending 31 March is due by 21 May. If you lodge through a registered tax agent, you generally get a later due date. Payment is due at lodgement.

If your FBT bill for the previous year was $3,000 or more, you move onto quarterly instalments paid through your activity statement, rather than one annual payment.

What this means for you

The practical risk for a small business is not the big obvious perk. It is the work car sitting in the driveway on the weekend, or the car space out the back, that never gets thought of as a benefit until the ATO asks about it. Because the cost of the car and the parking already sits in your accounts as a deduction, the benefit is visible. That mismatch, a deduction claimed with no matching FBT considered, is exactly the sort of thing a review looks for.

The good news is that most small business FBT is manageable with a bit of planning. Keeping a logbook for work vehicles, tracking who gets what, and knowing which benefits are exempt can bring a liability down or remove it. The work is mostly in the records, and records are easier to keep as you go than to reconstruct in May.

If your business provides vehicles, parking or other perks and you are not sure whether you have an FBT obligation, speak to a tax professional about your specific situation. ABBS Tax handles FBT alongside your bookkeeping and income tax, so your records and your return come from the same team. Call us on 1300 022 270.