Not every employer needs to lodge a Fringe Benefits Tax (FBT) return. So how do you know if you need to?

We’ll run through four common scenarios to help you work out whether your business needs to lodge an FBT return:

  • You provided a taxable benefit and need to lodge

  • Your benefits are exempt, so you may not need to lodge

  • You’re a charity or not-for-profit with special FBT rules

  • You haven’t provided any benefits at all

Before identifying your business’ situation, here’s a quick refresher on how FBT works.

What Is FBT?

Fringe Benefits Tax (FBT) is a tax that employers pay when they give employees something of value that isn’t their regular salary (think of company cars, paid gym memberships, or free accommodation).

You may be wondering, why does FBT exist?

Well, without it, businesses could replace employees’ wages with non-cash benefits, which can significantly reduce the amount of tax the employee pays. FBT closes that loophole by taxing those benefits separately. Importantly, the employer pays the tax and not the employee who receives the benefit.

The FBT year runs from 1 April to 31 March (not 30 June like the regular tax year). The tax rate applied is 47% to a “grossed-up” value of the benefits provided (ATO — FBT overview).

The grossed-up value depends on the benefit, but in most cases is either 2.0802 (GST) or 1.8868 (non-GST) times the value provided.

Example:

If you pay $10,000 in school fees for an employee’s child, the gross-up is:

$10,000 × 1.8868 = $18,868

The FBT on that amount is:

$18,868 × 47% = $8,867.96

So, from the business’s perspective, they pay $10,000 in school fees and $8,867.96 in FBT, totalling $18,867.96.

That’s a high tax rate that usually only benefits income earners on the highest marginal tax rate, but plenty of common benefits are either exempt or fall below the threshold.

This is exactly why it’s worth checking your situation carefully.

Do You Need to Lodge a Return?

You need to lodge an FBT return if you’ve provided fringe benefits to employees during the FBT year (1 April to 31 March) and those benefits aren’t fully covered by an exemption.

Here’s how to work out if you need to lodge.

You provided a benefit and it's taxable → Lodge a return

If you’ve given an employee something that the ATO considers a fringe benefit and no exemption applies, you have an FBT liability and need to lodge.

Example: Jess runs a small business and lets her employee use the company car on weekends for personal trips. That’s a taxable fringe benefit — Jess needs to lodge an FBT return.

Common taxable benefits include the following (ATO — Types of fringe benefits):

  • Private use of a company car;
  • Paying an employee’s personal bills or expenses;
  • Entertainment like meals or event tickets;
  • Low or interest-free loans to employees;
  • Paying for an employee’s accommodation or housing; and
  • Reimbursing private school fees or health insurance premiums.

See the full list of fringe benefit types on the ATO website.

You provided a benefit, but it's exempt → You may not need to lodge

Not everything you do for your staff triggers FBT. There are several important FBT exemptions:

  • Minor benefits exemption — if a benefit is worth less than $300 and you don’t provide it regularly, it’s generally exempt (ATO — Minor benefits); and
  • Work-related items — laptops, tools, and portable devices provided primarily for work use are exempt, one per employee per year (ATO — Work-related items).

Example 1: At Christmas, Mark gives each of his employees a $200 gift hamper. Because it’s under $300 and it’s a one-off, it’s covered by the minor benefits exemption. No FBT liability, no return needed.

Example 2: A business buys its employee a laptop for work. If the employee primarily uses it for work, no FBT applies.

One thing to note: if you’re already registered for FBT but all your benefits are exempt, you may still need to lodge a nil return. Check with your tax adviser if you’re in this situation.

You're a charity or not-for-profit → Special rules apply

Charities and certain not-for-profit organisations get access to FBT concessions that can significantly reduce or eliminate their liability, even if they’re providing substantial benefits through salary packaging arrangements. However, they still need to be registered and maintain records.

Example: A public benevolent institution lets staff salary package up to $15,900 in living expenses per year. Their FBT exemption means that little to no tax applies, but they still need to stay on top of their FBT obligations (ATO — FBT concessions for not-for-profits).

You haven't provided any benefits → No return needed (but double-check)

If you genuinely haven’t given employees anything beyond their wages, you don’t have an FBT liability and won’t need to lodge. Before you are sure, it’s worth doing a quick mental audit:

  • Do any employees have access to a company car?
  • Have you paid for any personal expenses on their behalf?
  • Have you shouted staff meals, events, or gifts?
  • Do you have any loan arrangements with employees?

Example: David runs a small retail shop and pays his staff wages only. There are no cars, no perks, and no reimbursements. David has no FBT obligations.

If the answer to all of the above is no, you don’t need to lodge an FBT return.

Don't Forget: Reportable Fringe Benefits

Even if your FBT liability is low, there’s another obligation to be aware of. If you provide an employee with benefits totalling more than $2,000 in taxable value over the FBT year, you need to report the grossed-up amount on their payment summary (ATO — Reportable fringe benefits).

This doesn’t change your FBT bill, but it does affect the employee’s taxable income for items such as the Medicare levy surcharge and government benefit calculations.

When Is the FBT Return Due?

How you lodge Due date
Self-lodged 21 May
Through a registered tax agent 25 June

Payment is due at the same time as lodgement (ATO — FBT return lodgement). If you pay FBT quarterly through your BAS, different dates apply — your tax agent can advise.

Key Takeaways

You need to lodge an FBT return if you’ve provided taxable fringe benefits to employees between 1 April and 31 March. If your benefits are fully exempt, you likely don’t need to lodge. However, if you’re already registered for FBT, confirm with your adviser whether a nil return is required.

And if you’re not sure whether something counts as a fringe benefit, that’s exactly the kind of question worth asking before the FBT year ends on 31 March.