Fringe Benefits Tax (FBT) is a federal tax that employers pay on most non-cash benefits provided to employees or their associates: for example, work cars used privately, expense payments, entertainment, and low-interest loans. FBT is separate from income tax and is paid by the employer, not the employee.
FBT year and rates
The FBT year runs from 1 April to 31 March (not the income tax year). FBT is calculated at the top marginal individual income tax rate plus Medicare levy, grossed up using a type 1 or type 2 multiplier depending on whether the employer was entitled to a GST credit on the benefit.
Common fringe benefit types
- Car fringe benefits — private use of a company car, valued using the statutory formula or operating cost method.
- Expense payment benefits — employer reimburses or pays a personal expense of the employee.
- Loan fringe benefits — employer lends money at below the ATO's benchmark interest rate.
- Entertainment — meals, sporting events, and functions, with specific meal entertainment rules.
- Residual benefits — any other non-cash benefit not covered by a specific category.
Exemptions and concessions
- Minor benefits exemption — benefits with a notional value under $300 each that are infrequent and irregular.
- Work-related items — laptops, mobile phones, and protective clothing used primarily for work.
- Not-for-profit capping — public benevolent institutions and hospitals have a capped rebate amount per employee.
- Electric vehicle exemption — eligible zero or low-emission vehicles first held on or after 1 July 2022 may be exempt.
Employers self-assess FBT, lodge an FBT return by 21 May (or via tax agents under PLS concessions), and pay the tax. FBT reportable fringe benefits amounts above the $2,000 threshold must be reported on the employee's income statement through STP.