Fringe Benefits Tax (FBT): What Employers Need to Know in 2026
Written by Tegan Streeter - Partner.
Let me introduce you to Fringe Benefits Tax…
If you have employees (including yourself if you’re working in your own business) then let me introduce you to Fringe Benefits Tax… also known as "FBT".
I know, I know. Income tax, BAS, super, payroll tax… and now FBT too? It feels like the ATO is playing alphabet bingo.
But you’re in good hands. My goal here is to make sure you don’t get caught out, especially when the consequences can be expensive.
So, What Is FBT?
FBT is a tax employers pay when they provide employees with benefits on top of salary or wages.
Think things like:
A boujee Christmas party
Using the company car for school pick‑ups
Paying for gym memberships
An interest‑free loan to an employee
It can feel like you’re being punished for being a generous boss. But I promise, with the right planning, it doesn’t have to be scary nor expensive.
Why Does FBT Matter?
Because the tax rate on fringe benefits is (brace yourself) 47%. Yep, absolutely criminal if you ask me.
The good news? Many businesses have little to no actual FBT payable once relevant exemptions and reductions are applied because certain benefits don’t count or are reduced under FBT rules. But the key is ensuring you’ve demonstrated that to the ATO! So that is where our team come in to help you with the FBT planning and reporting.
And here’s the kicker:
The ATO audits FBT a lot. They impressively cross‑check information with other government database, e.g. we've even noticed they receive info directly from state transport departments about vehicles registered in company names. So if something doesn’t line up… they know about it.
When Does FBT Apply?
Just to keep life interesting, the FBT year is totally different to the financial year
FBT Year: 1 April – 31 March
That means your 2026 FBT Return is due in late May 2026.
Let us keep on top of these dates for you.
Does FBT Affect Your Business?
Every business is different, but if any of these sound familiar, then yes it's worth chatting to us.
You or your employees use business vehicles for both private & work purposes
You pay for staff benefits like parking, private health, school fees, housing or gym memberships
You cover phone or home internet used privately and for work
You host a well-deserved, slightly fabulous Christmas party
You’ve loaned money interest‑free to staff
The Big Question:
“If my FBT is $Nil, why bother lodging a return?”
Great question, and here’s where things get really important.
Lodging an FBT Return (even a $Nil return) protects your business.
Once you've lodged a FBT return the ATO has a maximum three‑year time limit where they can go back and audit.
When you don’t lodge?
There is no time limit which means the ATO can go back as far as they like. Five years… 10 years… even all the way back to when you first hired staff. And if you can’t produce documentation showing why FBT wasn’t payable (logbooks, declarations, entertainment records, etc.), the ATO is likely to do the below, and this is where things can get messy:
Assume FBT should have been paid
Assess you for those years
Charge penalties and interest
Potentially charge you FBT for employees who may not even work for you anymore
Lodging a $Nil FBT Return is one of the simplest, most effective ways to protect your business from a costly, backwards‑looking audit. Think of it as cheap insurance and peace of mind.
Want to chat about whether you should lodge an FBT return?
We’re here to make this easy. We’re currently reviewing all our clients to see who needs an FBT return, so if we think it applies to you, we’ll be in touch soon. If you’re unsure in the meantime, reach out to your dedicated team.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountant.