Updated April 2025

With the fringe benefits tax (FBT) year ending on 31 March and lodgement deadlines fast approaching, now is the critical time for employers to review their FBT obligations.  

The ATO has signalled specific focus areas for 2025, particularly around vehicle use and record-keeping.  

In this article, we outline what’s changed, what the ATO is watching and when you need to lodge. 

What’s FBT, and which employee benefits are subject to the tax?  

Simply put, fringe benefits tax, or FBT, is a tax businesses pay on certain perks (or ‘fringe benefits’) they provide to their employees beyond their regular salary. If your business provides any of the following employee perks, it’s highly likely you’re providing a fringe benefit: 

  • Private use of company cars  
  • Gift cards  
  • Car parking 
  • Travel points  
  • Housing  
  • Expense payments (where the employer pays the employee’s personal expenses) 
  • Product allowances and discounts  
  • Entertainment in the form of Christmas parties and functions  
  • Other forms of compensation that are not part of a salary or wage. 

An easy way to think about it is that any non-cash benefits you provide to your employees will probably be a fringe benefit, and FBT is the way those benefits are taxed.  

For more comprehensive information on the basics of FBT, check out our article, ‘What is fringe benefits tax (FBT) in Australia?’ 

What are the FBT lodgement dates for 2025?  

The FBT year runs from 1 April to 31 March, which differs from the standard financial year. For the 2025 FBT year (ending 31 March 2025): 

  • Self-lodgers: FBT returns and payments are due by 21 May 2025 
  • Tax agent lodgements: Due by 25 June 2025.  

What’s new in FBT in 2024-2025 

Plug-in hybrid electric vehicles are no longer considered exempt from 1 April 2025 onwards 

Since 1 July 2022, benefits associated with providing eligible electric cars to employees have been exempt from FBT. This includes both the car itself and associated running costs such as registration, insurance, repairs and charging costs. 

However, from 1 April 2025, plug-in hybrid electric vehicles will no longer qualify for this exemption. Only battery electric vehicles and hydrogen fuel cell electric vehicles will remain eligible. 

It’s also important to note that electric motorcycles and scooters don’t qualify for the exemption as they aren’t considered cars for FBT purposes. 

You can find more details in our article, ‘The FBT electric cars exemption explained’.  

What’s on the ATO’s FBT watch list for 2024-2025?  

The ATO has released a summary of the FBT issues that will ‘attract their attention’ this year. Most of these focus on vehicle usage and record-keeping: 

Incorrect classification of motor vehicle categories  

There are three different categories of motor vehicles. These are:  

  • Cars carrying fewer than nine people, including the driver  
  • Cars designed to carry goods rather than passengers, with a carrying capacity of less than one tonne (e.g. dual-cab utes) 
  • Vehicles with a carrying capacity of more than one tonne.  

The type of vehicle affects the method used to calculate the FBT and whether certain exemptions can apply. Misclassification can lead to incorrect FBT calculations and potential penalties. 

Incorrectly treating an employee’s private use of a vehicle as business use  

An employee using a company vehicle for private purposes attracts FBT. Private use includes: 

  • Travelling to and from work 
  • Running personal errands 
  • Collecting children from school 
  • Weekend and holiday travel.  

The ATO advises a simple test: “If the employee had paid for the cost of using the car, could they have claimed an income tax deduction themselves?” If not, it’s likely private use. 

Insufficient detail in vehicle logbooks  

The ATO says it continues to encounter inadequate logbooks, with common issues including: 

  • Inconsistencies between log book entries and other records  
  • Impractical log book entries that can’t be explained (e.g. when the distance logged exceeds the actual distance) 
  • Discrepancies between mileage logged and odometer readings 
  • Trips that combine business and private travel recorded as a single business entry.  

For a valid logbook, ensure it includes: 

  • Start and end dates of journeys 
  • Odometer readings 
  • Kilometres travelled 
  • Detailed purpose of each journey (simply writing “business” is insufficient).  

If your logbook is deemed invalid, the ATO may reduce your business use percentage to zero or apply the statutory formula method, potentially resulting in a higher FBT liability. 

Request our free FBT questionnaire 

At Davidsons, we provide our business clients with an FBT questionnaire that asks straightforward questions about various benefits to help them assess their FBT obligations.  

If you’re an employer and would like to learn more about FBT or receive our questionnaire to help assess your obligations, please contact us. 

Need help navigating your FBT obligations?  

Our experienced team can help you understand your obligations, identify potential exemptions and implement strategies to minimise your FBT liability while remaining compliant. 

You can reach out to us by: 

This article was written by Senior Accountant, Jenny Elliott.  

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Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.