For many small and medium-sized businesses, Fringe Benefits Tax (FBT) can be overlooked until the end of the financial year. However, preparing early helps avoid unexpected liabilities, compliance risks and last-minute administration.
The FBT year runs from 1 April to 31 March, and preparation before 31 March 2026 is essential to ensure your business records are accurate and your reporting obligations are met.
FBT is administered by the Australian Taxation Office and applies to non-cash benefits provided to employees or their associates.
What is Fringe Benefits Tax (FBT)?
Fringe Benefits Tax is a tax employers pay on certain non-cash benefits provided to employees (or their associates) in addition to salary or wages. These benefits can include things like company vehicles, entertainment, expense reimbursements and salary packaged benefits.
FBT is separate from income tax and is administered by the Australian Taxation Office. Even if a business is not required to pay income tax, FBT obligations may still apply if benefits are provided to employees or their associates.
Your 2025–26 FBT Preparation Checklist
To prepare before 31 March, businesses should review the following areas:
1. Review Any Business Vehicles Used by Employees
Vehicles are one of the most common FBT triggers for small businesses.
Check whether employees have access to:
• Company cars, including fuel and electric;
• Dual-cab utes
• Work vehicles taken home overnight;
• Any other vehicles including motorcycles or e-bikes.
Actions to take before 31 March:
✔ Confirm odometer readings on 31 March
✔ Ensure detailed purchase records are available for any new vehicles acquired during the year
✔ Ensure valid logbooks are in place if using the operating cost method
✔ Review private vs business use
✔ Confirm any employee contributions with documentation
Even occasional private use can trigger FBT.
2. Check Employee Expense Payments or Reimbursements
If your business reimburses employees for personal expenses, this may create an FBT liability.
Common examples include:
• Personal travel costs
• Home internet or phone expenses
• Memberships or subscriptions
• Private education or training
Ensure documentation clearly shows whether the expense is work-related and deductible.
3. Review Entertainment and Staff Events
SMEs often provide benefits such as:
• Team lunches
• Christmas parties
• Staff celebrations
• Client hospitality
These may fall under meal entertainment, which can attract FBT depending on how it is structured.
Before year-end:
✔ Separate client entertainment from employee entertainment
✔ Review minor benefit exemptions
✔ Ensure expenses are categorised correctly in accounting systems
✔ Where possible, keep a record of who attended these team events as this may result in a more effective tax outcome
4. Confirm Employee Declarations Are Complete
Some FBT concessions rely on formal documentation from employees.
Some examples where declarations may be required are:
✔ Travel diaries for extended work travel
✔ Living-away-from-home allowance declarations
✔ Otherwise deductible rule declarations
Without proper documentation, legitimate concessions may be denied.
5. Identify Benefits That May Be FBT-Exempt
Many businesses overlook exemptions that can significantly reduce FBT exposure.
Examples may include:
• Work-related devices such as laptops, tablets and mobile phones
• Electric vehicles (EVs) that meet eligibility criteria
• Minor benefits under $300, provided infrequently
• Training and reskilling programs
The ATO outlines available exemptions and concessions (click here). Understanding these concessions can help structure benefits more efficiently.
6. Reconcile Payroll, Accounting and Finance Records
FBT often sits between payroll, accounting and finance, which can create reporting gaps.
Before 31 March ensure:
✔ Payroll records match accounting transactions
✔ Employee benefits are correctly categorised
✔ GST treatment aligns with FBT calculations
✔ Supporting documentation is retained
Early reconciliation reduces errors at lodgement time.
7. Estimate Your Potential FBT Liability
FBT can impact cash flow, particularly for businesses providing vehicles or regular staff benefits.
Before the end of the FBT year review what benefits may have been provided
Key FBT Deadlines for 2026
• 31 March 2026 – End of the FBT year
• 21 May 2026 – Lodgement deadline (self-lodgement)
• 25 June 2026 – Lodgement deadline via tax agent
Starting preparation before 31 March helps ensure businesses meet these obligations without unnecessary pressure.
Need Help with Your 2025–26 FBT Preparation?
Our experienced team of Tax Specialists and Chartered Accountants are here to help reduce your compliance risk, improve tax efficiency and avoid unnecessary stress. Speak with our team on Ph. 08 9321 2111 to arrange an introductory consultation in our West Perth office at no cost or obligation to you.
Disclaimer
The above is general commentary with respect to FBT legislation and guidance. The list above is not exhaustive and you or your business may have further exposure to FBT, depending on your situation.
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