Running a business takes focus, and tax admin doesn’t always top the list. But as the 2025 Fringe Benefits Tax (FBT) year ended on 31 March, now’s the time to ensure you’re across your fringe benefits obligations.
FBT can be tricky, especially if you’re unsure what counts, what needs to be reported, or how it affects your tax position.
To help cut through the confusion (and let’s face it, there is a lot of confusion when it comes FBT and tax), Growth iQ’s tax accountants in Adelaide have put together a straightforward guide.
It covers what you need to know about FBT, how to stay compliant, and how to make the most of any tax-saving opportunities before the deadline hits.
What is the Fringe Benefits Tax?
Fringe Benefits Tax (FBT) is a tax employers pay on certain non-cash perks they provide to employees or their family members. It covers things like personal use of a company car, entertainment expenses, private health cover, housing, or lifestyle benefits like gym memberships and travel.
The FBT year wrapped up on 31 March, and if you’re lodging directly with the ATO, your payment is due by 21 May 2025. If you’re using a registered tax agent, you might get an extension to 25 June, but only if your business is added to their FBT client list by 21 May.
Do You Need to Lodge an FBT Return?
If your business provides any fringe benefits, reviewing your FBT obligations is essential. Even if no tax is owed, you should still consider lodging a nil return. This helps show you’re compliant and limits the ATO’s audit window to three years, instead of leaving things open-ended.
And FBT isn’t just about employee perks. Non-cash benefits given to directors, like access to a company vehicle, can also trigger FBT. That’s why it’s worth reviewing all benefits across the board, not just the obvious ones.
What’s New for FBT in 2025 – Preparing for the Deadline.
If you want to avoid last-minute stress and stay on the ATO’s radar for the right reasons, now’s the time to get FBT organised. Here’s what to focus on as the FBT year wraps up:
Review your fringe benefits
Go through everything you’ve provided to employees or directors. This includes company cars, housing, loans, entertainment, and any other non-cash perks.
Check for exemptions
Some items, like laptops or phones used mostly for work, may be exempt from FBT. Make sure you meet the requirements to claim those exemptions.
Keep vehicle records up to date
Accurate logbooks and odometer readings help you clearly separate business use from personal use, which affects your FBT calculations.
Look at salary packaging
Smart salary packaging can help reduce your FBT bill. If you’re offering electric vehicles, you may be eligible for exemptions. Just keep in mind that from 1 April 2025, plug-in hybrids (PHEVs) will no longer qualify.
Lodge your return, even if it’s nil
If you don’t owe any FBT, lodging a nil return still matters. It shows the ATO you’re compliant and limits how far back they can audit your business.
Talk to your accountant early
The deadline for lodgement depends on how you’re submitting your return. If you’re using a tax agent, it’s worth checking in early to make sure everything’s in order.
Common FBT Mistakes to Avoid
A few simple oversights can quickly lead to trouble with your FBT obligations. These are some of the most common areas where businesses slip up:
- Missing entertainment expenses – Meals, events, and staff functions can attract FBT if not handled correctly. These costs are often missed or incorrectly classified, especially when staff and clients are involved.
- Assuming work tools are automatically exempt – Just because a phone or laptop is used for work doesn’t make it exempt. You need to show it’s mainly for business use and back it up with clear records.
- Forgetting about directors – In smaller businesses, it’s easy to overlook that non-cash benefits for directors, like a company vehicle or paid travel, can still trigger FBT.
- Not keeping proper records – Missing logbooks, odometer readings, or receipts can make it hard to calculate your FBT accurately. Without good documentation, you run the risk of penalties or being audited by the ATO.
Consequences of FBT Non-Compliance
Ignoring or underestimating your FBT obligations can have serious consequences. The ATO can apply penalties if fringe benefits are not reported properly, especially if it looks like the errors were ongoing or intentional.
Even small mistakes, like undervaluing a benefit or missing an exemption, can lead to unexpected tax bills. And if it happens during an audit, it can affect more than just your finances. It can damage your business’s reputation and raise red flags with clients, investors, and future partners.
Important Factors for the 2025 FBT Year-End
There are two key updates to keep in mind as you wrap up this FBT year:
Electric vehicle FBT exemptions
You can still access FBT exemptions for eligible electric vehicles purchased after 1 July 2022, as long as they fall under the luxury car tax threshold. Just be aware that plug-in hybrids will no longer qualify from 1 April 2025.
Proposed $20,000 entertainment deduction
The Liberal Party has proposed a $20,000 deduction for business-related entertainment, which could reduce compliance headaches for small businesses. However, this is still a proposal and depends on the next federal election. So for now, you still need to track and categorise all entertainment spending accurately.
How Growth iQ’s Tax Accountants Can Help You Manage FBT in 2025
To ensure a smooth year-end FBT process, Growth iQ’s experienced tax accountants recommend the following:
- Review previous years’ returns: We’ll help you assess past returns for accuracy, ensuring you’re well-prepared to manage your FBT obligations for the current year.
- Request data early: We assist with gathering required data from other departments or external suppliers well in advance, preventing any delays in your FBT lodgement process.
- Consult early: Whether you’re lodging directly or through a tax agent, our team can guide you on key deadlines, such as the 25 June extended deadline, to ensure timely compliance.
- Professional valuations: For complex fringe benefits, like property or non-cash gifts, our expert accountants can help you navigate difficult calculations with professional valuation services.
- Audit-ready records: We’ll ensure your records are up-to-date and audit-ready, particularly for vehicles, entertainment, and salary packaging, helping you avoid unnecessary investigation from the ATO.
Get Ready Before the FBT Deadline
The FBT year wraps up on 31 March, and if you’re lodging directly, your return is due by 21 May. If you’re using a tax agent, you could qualify for an extension to 25 June, but only if your business is linked to their client list by 21 May.
Don’t leave it to the last minute. Contact Growth iQ’s Adelaide tax accountants today for practical advice and expert support to help you lodge on time and with confidence.