You may be wondering..... What is the go with all the emoji's above? If you guessed Fringe Benefits Tax (FBT for short you would be correct). If you looked at those emojis and thought “thank goodness FBT doesn’t apply to my business”, I have some bad news for you, it probably does.
In fact, the ATO has officially put a giant magnifying glass over Fringe Benefits Tax for 2026. With their data-matching tech now linking businesses tax returns directly to vehicle registrations, the head in the sand approach is a one-way ticket to an audit.
The good news is that most small businesses don’t actually end up paying Tax, but we do need to ensure we have the correct declarations and calculations completed.
And just to be a pain, the FBT year is 1st April to 31st March, yes the FBT year ends Tuesday 31st March 2026.
What is FBT?
If you provide your employees with a benefit other than Salary/Wages/Bonuses/Super, you are likely to be providing Fringe Benefits to your employees. These 'benefits' include:
- providing a car 🚗 (Ute’s and EV’s are also included in this)
- providing a mobile phone 📱
- providing computers 💻 🖥
- having a work xmas party 🎉
- providing things like a corporate box at a sporting event ⚽️ 🐎
- providing employees with lunch / dinner / alcohol (like Friday afternoon drinks) 🥗 🍔🍕 🍻 🍸
- providing employees with car parking 🏢
- providing employees with loans 💰
- giving gifts to your employees 🎁
Basically, if you provide any of the above then you are likely to be providing Fringe Benefits to your employees. While there are some exemptions and thresholds before you have to pay tax on these benefits, you are still required to prepare the calculations, lodge the return and keep the records.
Don't stress though! We will take care of the return and the lovely paperwork...but we do need you to action our request.
Why now?
This year the FBT year ends on Tuesday (31st March). Yes, that's right it's a completely different year for fringe benefits tax than it is for your normal income tax.
The ATO are cracking down on non-compliance of FBT obligations so this isn't something you can ignore and put in the too hard basket. With data matching from your business tax returns as well as matching registrations of vehicles, it's super simple for the ATO to work out who is and who isn't compliant.
(hint, you don't want to be on the non-compliant list!)
2026 Update : Electronic Vehicles
If you have electric vehicles in your fleet there have been a slew of changes :
- Pure EV’s : still FBT-free. If it’s 100% electric and under the luxury limit ($91,387)
- Plug-in Hybrids : As of 1 April 2026, new plug-in hybrids are no longer exempt. Normal FBT rules will apply
- Charging at Home : the new FBT rate is 4.2cents per km to calculate home charging costs, which saves you from having to track every kilowatt
OK. What do I have to do?
This is where the good news comes in!
We’ve made this as painless as possible:
- Tuesday, 31st March: Check your inbox. We'll send you a quick checklist.
- The Odometers: We need your Odometer Readings as of March 31.
- Logbooks: If your logbook is more than 5 years old, it’s expired and we will need a new one.
- Mobile Phones: We also need to complete a few declarations for Mobile Telephones. So we need to know the names of anyone you pay a mobile phone bill for (all on the questionnaire).
Most of the other heavy lifting happens inside Xero, so once you've done the checklist, you just have to sign a few declarations and we’ll handle the rest.
Easy peasy.
So 1st step, complete the checklist. Then look out for your Declarations that will be sent to you for signature once your returns are completed over the next few weeks.
