Fringe Benefits Tax (FBT) 2025: What Your Business Needs to Know Before the Deadline

Fringe Benefits Tax (FBT) is a tax that employers must pay when they provide certain non-cash benefits to their employees. The FBT year runs from 1 April 2024 to 31 March 2025, and businesses need to meet lodgment and payment deadlines to avoid penalties.

Understanding FBT rules, recent changes, and ways to reduce tax liabilities is important for every business owner. As a Business Advisory firm, we help businesses navigate FBT compliance, ensure accurate reporting, and implement strategies to minimize tax liabilities. As a Tax Adviser, we provide expert guidance on structuring employee benefits efficiently to improve tax outcomes.

This guide will explain everything you need to know about FBT in 2025, including who needs to lodge, common mistakes to avoid, and strategies to manage your tax obligations efficiently. Planning can save you time, money, and unnecessary stress—so let’s get started.

FBT is a tax that employers pay on certain benefits provided to employees or their associates, such as family members. It applies to non-cash benefits that employees receive in addition to their salary or wages. Unlike income tax, FBT is based on the taxable value of the benefit, which is grossed up to account for the tax employees would have paid if they received the benefit as salary.

Examples of Fringe Benefits Subject to FBT

• Company cars are available for personal use.
• Entertainment expenses, including meals, events, and gifts.
• Low or interest-free loans to employees.
• Expense reimbursements for personal costs.
• Discounted goods and services provided by the employer.

While many of these benefits are taxable, some may qualify for exemptions and concessions, reducing or eliminating FBT liability.

Businesses must lodge an FBT return if they provide taxable fringe benefits to employees. This includes:

• Companies, trusts, and partnerships offering non-cash benefits.
• Employers using salary packaging arrangements.
• Not-for-profit organizations that exceed exemption limits.

Even if no FBT is payable, some businesses may need to submit a Nil Return to confirm compliance.

1. Plug-in Electric Vehicle (EV) FBT Exemption

The FBT exemption for plug-in hybrid electric vehicles (PHEV) ends 1 April 2025. Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025. For a PHEV to continue to be exempt for FBT, the PHEV must have been used or available for use before 1 April 2025 and there was a financially binding commitment to continue providing the use, or availability for use, of the car for private purposes on or after 1 April 2025.

2. ATO Focus on Car Fringe Benefits

The ATO is increasing its scrutiny on businesses that provide company cars. Employers must ensure proper logbook records are kept to distinguish between work-related and private use, as incorrect reporting could result in additional tax liabilities.

3. Tightened Compliance on Entertainment Benefits

Meal and entertainment expenses remain a key audit focus. Businesses should review their policies to ensure compliance and determine if any benefits qualify for exemptions or reductions.

Many businesses miscalculate or overpay FBT due to simple errors. Here’s how to avoid common mistakes:

1. Incorrectly Classifying Fringe Benefits

Some benefits may seem exempt but still attract FBT. Always check ATO guidelines or consult a Tax Adviser before assuming a benefit is tax-free.

2. Incomplete or Inaccurate Records

Lack of proper documentation—such as missing logbooks for company cars—can lead to higher FBT assessments. Keep detailed records of all benefits provided throughout the year.

3. Overlooking Exemptions and Concessions

Certain benefits, like work-related devices, eligible electric vehicles or otherwise deductible expenses, may be exempt from FBT. Businesses should review available exemptions before calculating liabilities.

4. Late Lodgment and Penalties

Failing to lodge on time can result in penalties and interest charges. Employers should prepare in advance to meet deadlines and avoid unnecessary fines.

To ensure compliance and minimize tax liability, businesses should take the following steps before 31 March 2025:

1. Conduct an FBT Review

• Identify all fringe benefits provided to employees.
• Assess which benefits are taxable, exempt, or eligible for concessions.

2. Maintain Accurate Financial Records

• Keep logbooks for vehicles to track business vs. private use.
• Retain invoices and receipts for entertainment and other expenses.

3. Calculate Employee Contributions

• Employees can make contributions towards benefits to reduce FBT.
• Ensure contributions are recorded before 31 March 2025.

4. Seek Professional Advice

• Work with a Business Advisory firm to assess compliance risks.
• Consult a Tax Adviser to structure benefits efficiently.

• 31 March 2025 – End of the FBT year.
• 21 May 2025 – FBT return and payment due (for self-lodged returns).
• 25 June 2025 – Extended deadline for businesses lodging through a registered tax agent.

FBT can be complex, but the right guidance simplifies compliance and reduces tax liabilities. As a Business Advisory firm, we assist businesses with:

• FBT compliance reviews to identify tax-saving opportunities.
• Accurate bookkeeping services to ensure correct FBT calculations.
• Timely lodgment of FBT returns to avoid penalties.
• Expert tax advisory services to help businesses minimize FBT liabilities.

Managing Fringe Benefits Tax (FBT) effectively is essential for businesses that provide non-cash benefits to employees. With the FBT 2025 deadline fast approaching, now is the time to review your obligations, ensure accurate record-keeping, and explore tax-saving opportunities.

Failing to comply with FBT requirements can result in penalties, increased tax liabilities, and ATO audits. Businesses can minimize tax burdens and stay compliant by conducting a thorough FBT review, maintaining proper documentation, and seeking professional advice.

At RV Advisory Group Pty Ltd, we specialize in helping businesses navigate FBT complexities. From compliance reviews and accurate bookkeeping to timely lodgment and Tax Advice, our expert team ensures your business meets all FBT requirements while optimizing tax efficiency.

For professional FBT compliance and tax advisory services, email us at reetika@rvag.com.au or call 0420 661 881. Let us help you stay compliant and maximize your tax benefits.