What is Fringe Benefits Tax (FBT) in Australia?

Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits they provide to employees or their associates. Common fringe benefits include company cars, car parking, private health insurance, and entertainment. The FBT rate is 47% and the FBT year runs from 1 April to 31 March. FBT is separate from income tax and is paid by the employer, not the employee.

Are electric vehicles (EVs) exempt from FBT?

Yes, electric vehicles and plug-in hybrid electric vehicles that were first held and used on or after 1 July 2022 are exempt from FBT. This exemption is currently legislated until 31 March 2027. The car must be below the luxury car tax threshold for fuel-efficient vehicles. This makes salary packaging an EV through a novated lease very tax-effective.

What is the difference between statutory and operating cost method for car FBT?

The statutory formula method calculates the taxable value as 20% of the car's cost price, regardless of how many kilometres are driven. It is simpler and requires no logbook. The operating cost method uses the actual costs of running the car (fuel, insurance, depreciation, etc.) and applies the business-use percentage from a valid logbook. The operating cost method can result in lower FBT if business use is high, but requires maintaining a logbook for at least 12 continuous weeks.

How does FBT affect my income tax?

While FBT is paid by the employer, the grossed-up taxable value of your fringe benefits is reported on your income tax return as your Reportable Fringe Benefits Amount (RFBA). This does not increase your income tax directly, but it is used to calculate obligations like Medicare Levy Surcharge, HELP/HECS repayment thresholds, child support, and other income-tested government benefits.

How can I reduce the amount of FBT payable?

There are several ways to reduce FBT: (1) Choose an electric vehicle, which is FBT-exempt. (2) Make after-tax employee contributions towards the benefit to reduce the taxable value. (3) Use the operating cost method with a logbook showing high business use. (4) Choose exempt benefits like portable electronic devices used primarily for work. (5) Structure benefits to fall under the minor benefits exemption (under $300).

FBT Calculator

Calculate Fringe Benefits Tax on company cars, electric vehicles, and other benefits. Compare statutory formula vs operating cost method with 2025-26 FBT rates.

Last verified: 1 July 2025

FBT Exemption for Electric Vehicles 2026 — Everything You Need to Know

Complete guide to the FBT exemption for electric vehicles in Australia 2026. Eligibility rules, the $91,387 luxury car limit, PHEV changes, employer requirements, and how much you save.

Salary Packaging in Australia: How It Works & Is It Worth It?

Salary packaging can save you thousands in tax, especially in not-for-profit and healthcare. Here's how it works and who benefits most.

Salary Sacrifice into Super: How to Save Tax & Boost Retirement

Learn how salary sacrificing into superannuation can save you thousands in tax while building your retirement savings faster. Includes worked examples, cap rules, and pitfalls to avoid.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

FBT Calculator

Related Articles

Related Tools