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Fringe Benefits Tax (FBT) 2025 Year-End Update

April 11, 2025

The 2025 FBT year ended on 31 March 2025. Employers must review their FBT obligations to ensure compliance and minimize liabilities.

Key FBT Updates for 2025

1. FBT Rates Remain Unchanged

  • FBT rate: 47% (aligned with the top marginal tax rate + Medicare Levy).
  • Gross-up rates:
    • Type 1 (GST benefits): 2.0802
    • Type 2 (GST-free benefits): 1.8868

2. Key FBT Law & Policy Changes

a) Plug-in Hybrid Vehicles No Longer Exempt

From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are no longer eligible for the FBT exemption unless:

  • The vehicle was exempt before 1 April 2025, and
  • There is a binding financial commitment to continue providing private use.

b) Car Parking Fringe Benefits – ATO vs. Court Ruling

A recent Federal Court case (Toowoomba Regional Council v FCT [2025]) ruled that a car park not operated for profit was not a “commercial parking station,” contradicting the ATO’s stance in TR 2021/2. Employers should review parking arrangements within a 1km radius of commercial car parks.

c) Simplified FBT Record-Keeping

Employers can now use existing business records (instead of formal declarations) to support exemptions and concessions, streamlining compliance.

d) Increased ATO Compliance Focus

  • The ATO estimates only 65% of expected FBT is reported.
  • Increased audits, data matching, and education for SMEs and tax agents.
  • State revenue offices are also scrutinizing FBT for payroll tax compliance.

FBT Compliance Tips

1. Identify All Employee Benefits

Review data from payroll, expense systems, HR records, car fleets, novated leases, and third-party providers.

2. Leverage Technology

Use automation, e-logbooks, and data analytics to streamline FBT reporting.

3. Car Parking Exemptions

Check if your business qualifies for:

  • Small business exemption (turnover <$50M, not a listed company).
  • Charity/education institution exemption.

4. Otherwise Deductible Rule

Reduce taxable value if the employee could have claimed a deduction. Employee declarations are required.

5. Minor Benefits Exemption

Exempt if:

6. Lodging a Nil FBT Return

  • Benefit <$300 (GST-inclusive).
  • Provided infrequently and not a reward for services.

If registered but no benefits provided, lodge a nil return to avoid penalties and limit ATO amendment periods.

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