Navigating FBT and avoiding common pitfalls

What is Fringe Benefits Tax (FBT)?

Fringe Benefits Tax (FBT) is a tax levied on employers in Australia for benefits provided to employees or their associates in respect of their employment. These benefits can include company cars, low-interest loans, reimbursement of expenses, entertainment, and more. Unlike income tax, FBT is separate and must be reported and paid by the employer, not by the employee.

Key FBT principles every employer should know

• The nature of Fringe Benefits: Fringe benefits go beyond regular salary and wages, taking the form of perks or non-cash advantages.
• Who pays FBT? The employer is responsible for the calculation, reporting, and payment of the tax.
• FBT year: The FBT year runs from 1 April to 31 March, and all FBT returns must be lodged accordingly.
• Types of benefits: Common fringe benefits include provision of vehicles, entertainment, housing, expense payments, and living-away-from-home allowances.
• Exemptions & concessions: Some benefits, such as laptops or work-related portable electronic devices, may be exempt under specific conditions.

Reporting and payment obligations

Employers must keep accurate records of all benefits provided, calculate the taxable value using the appropriate valuation methods, and lodge an annual FBT return. Payment is due soon after the end of the FBT year. Failure to comply may result in penalties and interest charges from the Australian Taxation Office (ATO).

Common FBT mistakes and how to avoid them

• Incorrect classification of benefits: Misclassifying perks as exempt when they are taxable can lead to underpayment and potential penalties. Review ATO guidelines regularly to ensure proper classification.
• Poor record-keeping: Inadequate documentation of benefits provided and their values is a frequent trap. Implement robust systems to track all fringe benefits.
• Forgetting the FBT year dates: The FBT year does not align with the financial year, which can cause confusion and late lodgments. If you lodge your own return or use a tax professional who lodges a paper return the deadline for FBT is 21 May. If you use a registered tax professional who lodges your return electronically the deadline is 25 June. 
• Underestimating the value of benefits: Failing to use the correct valuation methods can result in tax shortfalls. Seek advice if you are unsure about calculating taxable values.
• Missing exemptions or concessions: Not applying eligible exemptions can mean unnecessary tax payments. Review the latest ATO updates on exemptions and concessions or speak to your usual Forvis Mazars advisor.

Strategies to avoid FBT pitfalls

• Educate your payroll team: Regular training and updates on FBT rules empower staff to manage compliance effectively. Alternatively, outsourcing your payroll to a professional, such as Forvis Mazars, could be an effective strategy.
• Engage professional advice: Consult tax professionals, especially for complex benefits.
• Utilise technology: Use payroll and accounting software that supports FBT tracking and reporting.
• Review benefits annually: Conduct yearly audits to ensure all benefits are appropriately declared and valued.

FBT compliance doesn’t have to be complicated. By understanding your responsibilities and keeping your processes organised, you’ll not only avoid unnecessary penalties but also ensure your team enjoys the full value of the benefits you offer. Take charge of your FBT strategy, review your practices regularly, stay up to date with changes, and reach out for expert support when you need it. Proactive management will help you navigate the complexities of FBT with confidence and peace of mind.

If you’d like assistance with understanding FBT, maintaining your records, staff training, outsourcing your payroll requirements or lodging your return, connect with your usual Forvis Mazars advisor or contact one of our FBT specialists via the form or contact details below:

Published: 19 January 2026

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

All rights reserved. This publication in whole or in part may not be reproduced, distributed or used in any manner whatsoever without the express prior and written consent of the Forvis Mazars, except for the use of brief quotations in the press, in social media or in another communication tool, as long as Forvis Mazars and the source of the publication are duly mentioned. In all cases, Forvis Mazars’ intellectual property rights are protected and the Forvis Mazars Group shall not be liable for any use of this publication by third parties, either with or without Forvis Mazars’ prior authorisation. Also please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.