What You Need to Know About Fringe Benefits Tax for 2025: A Quick Guide for Business Owners.

As 31 March 2025 approaches, it’s time to prepare for the end of the Fringe Benefits Tax (FBT) year. The ATO reported a $1.9 billion FBT revenue gap indicating significant underreporting by employers. To address this, the ATO plans targeted compliance for high-risk employers, urging them to review their FBT obligations to avoid penalties and ensure accurate reporting. Here’s a quick breakdown of what you need to know.

What is FBT?
Fringe Benefits Tax (FBT) is paid by employers on certain benefits they provide to their employees, directors or other associates. Examples of fringe benefits include:

  • Providing a vehicle that is used for private purposes
  • Providing entertainment by way of a meal or drinks or free tickets to concerts
  • Reimbursing a personal expense incurred by an employee, such as school fees
  • Paying an employee’s gym membership
  • Giving benefits under a salary sacrifice arrangement with an employee

It’s important to start gathering all the details of these provided benefits as soon as possible to calculate any potential FBT liability. Your FBT Return must be lodged on time – due 25 June 2025 with payment to be made on this date also.

Even if no FBT is payable, we recommend lodging an FBT return to cap your ATO audit window to only 3 years. If you don’t lodge, the ATO’s audit window is unlimited, allowing them to review records from as far back as far as when your business started. This increases the risk of penalties and leaves your business unprotected. 

Key Actions to take on 31 March 2025
If you’re not registering for FBT or filing a Nil FBT return, you’ll still need to complete these key tasks on 31 March 2025:

  • Vehicle Odometer Readings: Have employees take a photo of their vehicle odometer readings and email them to you. This helps determine whether FBT can be reduced.
  • Private Use of Business Cars: Be mindful of private use, including commuting, as the ATO is closely monitoring this area.
  • Meal Entertainment Expenses: Review and prepare a register for any meal-related expenses provided to employees, their associates, and clients.
  • Other Fringe Benefits: Review and document other fringe benefits, following the FBT questionnaire.

Exempt Items from FBT
Common items not subject to FBT include:

  • Mobile phones, laptops, tablets
  • Protective clothing and tools of trade
  • Minor benefits under $300

Ways to Reduce Your FBT Liability
Here are some ways to lower your FBT liability:

  • Employee Tax Deductions: Offer benefits employees can claim as a tax deduction.
  • Exempt Benefits: Provide benefits that are exempt from FBT.
  • Employee Contributions: Employees paying part of the cost (e.g., fuel for a company car) can reduce the taxable value.

Next Steps
By acting early, you can minimize your FBT liability and avoid unnecessary audits. If you have any questions, don’t hesitate to reach out. We’re here to help!

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