1. Fringe Benefits Tax 2025 Basics: What Others Doesn’t Explain
Understanding Fringe Benefits Tax (FBT) is non-negotiable for Australian employers in 2025. It’s not just about giving your employees perks, but correctly reporting and paying taxes on them. While other providers offer surface-level guidance, they often skip the real-world complexities and hidden opportunities to reduce your liability.
FBT applies when employers provide non-cash benefits to employees or their associates (e.g., family members). This could include company cars, free meals, gym memberships, laptops, or even entertainment expenses. But exemptions exist, and failing to leverage them properly means paying more tax than you need to.
Below is a snapshot of common benefit types, how they’re taxed, and the available exemptions for 2025:
2025 FBT Rates & Exemptions
| Benefit Type | Taxable Value | 2025 Exemptions |
| Electric Vehicles (EV) | 20% of the car’s base value | Fully exempt if value ≤ $84,916 (LCT threshold) |
| Employee Meals | $30/meal (infrequent) | Exempt if ≤ 2 meals/week and consumed on premises |
| WFH Equipment | 50% depreciated value | Exempt if item ≤ $1,500 (e.g., laptops, headsets, monitors) |
| Contractor Benefits | 100% taxable | No exemption unless treated as an “employee-like” arrangement |
BetterPayroll in Action:
A Sydney café owner gives staff 3 on-site meals per week. According to ATO rules, only 2 are exempt. The third is fully taxable at 47%, resulting in an FBT charge. BetterPayroll flags the 3rd meal automatically and calculates liability without manual effort.
2. Critical Lodgment Deadlines (2025)
If you’re lodging FBT late or missing deadlines, it’s not just inconvenient, it’s expensive. The FBT year runs from 1 April 2024 to 31 March 2025, and reporting must happen well before EOFY pressures begin.
FBT Lodgment & Payment Timelines
| Action | Deadline |
| Lodgment (via tax agent) | 25 June 2025 |
| Lodgment (self-lodged) | 21 May 2025 |
| Payment Due | 28 May 2025 |
ATO Penalties for Late Lodgment
| Penalty Type | Amount |
| Late Lodgment | $222/month (capped at $1,110 for SMBs) |
| Underpayment Shortfall | 20% of tax owed + 8.34% interest |
For example, lodging your return just 2 months late could cost you $444 in base penalties, not including interest or additional charges for underpayment errors.
3. Step-by-Step FBT Lodgment Process
If you’re panicking over FBT complexity, don’t worry. Follow this simple workflow to meet ATO requirements without the stress.
Step 1: Identify Reportable Benefits
Start by listing all benefits given to employees or their families. Not every benefit is taxable, minor benefits under $300 or certain EVs and WFH tools may be exempt.
Taxable Examples:
- Company cars
- Parking spaces
- Loans and expense reimbursements
- Gym memberships
- Event tickets
Exempt Examples:
- EVs under $84,916
- COVID-era WFH tools under $1,500
- Occasional meals (max 2/week on-site)
- Laptops and tablets under the minor benefit rules
BetterPayroll Hack:
Use the FBT Eligibility Filter to automatically flag taxable vs. exempt items and avoid over-reporting.
Step 2: Calculate FBT Liability
Use this ATO-approved formula:
FBT Payable = (Taxable Value × Gross-Up Rate) × FBT Rate
- Type 1 Benefits (GST claimable): Gross-up = 2.0802
- Type 2 Benefits (non-GST claimable): Gross-up = 1.8868
- FBT Rate (2025): 47%
Example Calculation:
A $10,000 company car (Type 1 benefit)
FBT = ($10,000 × 2.0802) × 47% = $9,776.94
BetterPayroll Tool:
The FBT Calculator auto-applies all rates based on benefit type, pulls data from payroll, and generates ATO-ready summaries.
Step 3: Lodge via ATO Online Services
You’ll need to complete the NAT 2376 FBT Return Form, which can be submitted through:
- myGovID (business portal)
- Tax agent (BetterPayroll integrates directly)
- Payment Methods: BPAY, credit card, or deferred if eligible
Audit Warning:
Mismatch between FBT data and payroll/superannuation reports raises a red flag. Always reconcile benefits and salaries before lodging.
4. Advanced Scenarios Payroller Ignores
Generic payroll tools don’t cover these tricky—but—common FBT scenarios. Here’s how to navigate them in 2025.
1. Electric Vehicle (EV) Exemptions
Eligibility Rules:
- Vehicle must be zero-emission (BEV or PHEV)
- Value must be ≤ $84,916 (Luxury Car Tax threshold)
- First held and used from 1 July 2022
Why It Matters:
Providing a regular petrol company car may cost $9,000+ per vehicle in FBT, but an EV under the threshold is fully exempt.
2. Contractor vs. Employee Benefits
Giving non-employees perks? Be careful, these are almost always taxable.
| Contractor Status | FBT Liability? |
| Freelancer (ABN, flexible) | Yes – 100% taxable |
| Director contractor | Yes – if the benefit is work-linked |
| “Employee-like” terms | May qualify for exemptions |
Common Pitfall:
Paying for a contractor’s gym membership or laptop? That’s fully taxable at 47% unless they’re legally classified as an employee.
3. COVID-19 Work-from-Home (WFH) Extensions
The ATO extended some COVID-era concessions, but not all.
| WFH Item | Taxable? |
| Laptop ($1,500) | No – Exempt |
| Monitor ($800) | No – Exempt |
| Ergonomic Chair ($300) | No – Exempt |
| Home Internet (50% personal) | Yes – Taxable |
| Home Renovation | Yes – Fully taxable |
BetterPayroll Fix:
Use the WFH Benefit Tracker to allocate business vs. personal use and automatically tag items as taxable or exempt.
5. BetterPayroll’s Automation Advantage: Smarter FBT Compliance
Manual FBT tracking is a compliance risk. With new exemption thresholds and expanded audit coverage, automating your FBT management isn’t just convenient, it’s essential. Here’s how BetterPayroll helps employers automate and streamline every step of the FBT process.
1. Real-Time Compliance Alerts
- Receive alerts if your benefits exceed exempt thresholds (e.g., too many meals or over-valued EVs).
- Get flagged for missing employee declarations, such as unsubmitted car logbooks or unsupported minor benefit claims.
2. ATO-Approved Reporting
- Instantly generate the FBT Return (NAT 2376) with pre-filled payroll and benefits data.
- Seamlessly sync your FBT data with employee salaries and employment basis codes, ensuring no mismatches between reports and actual earnings.
3. Audit Trail Generator
ATO audits aren’t a matter of “if,” but “when.” BetterPayroll’s built-in audit trail tool:
- Logs every benefit provided with value, date, and exemption status
- Stores employee declarations and benefit justifications
- Exports 5-year audit-ready records as downloadable PDFs
You’ll never need to scramble for logbooks or recreate old spreadsheets again.
6. Why This Guide Beats Other FBT Content
Let’s be blunt: most payroll software vendors give you a one-liner about FBT and send you to the ATO’s 60-page PDF. That doesn’t help busy business owners or payroll managers stay compliant.
Here’s why this BetterPayroll-powered guide goes further:
- Deeper Coverage: Covers EVs, COVID-era WFH rules, contractor benefits, and new audit triggers.
- Practical Tools: From calculators to exemption checklists, everything is plug-and-play.
- Real-World Scenarios: Learn from real businesses (like the Melbourne IT firm saving $27K/year).
- Automation-First Focus: Everything is mapped, synced, and submitted from within one payroll platform.
7. Take Control of FBT Before the ATO Takes Control of You
FBT is one of those tax obligations that sneaks up on employers, especially when they offer great perks like meals, laptops, or electric vehicles. But ignoring or underreporting fringe benefits can cost you thousands in penalties, not to mention the headaches of an ATO audit.
The 2025 FBT landscape has more complexity than ever, with:
- Expanding EV exemptions
- Strict work-from-home limits
- Clarified contractor treatment
- Heavier penalties for misreporting
But the good news? You don’t need to navigate it alone or manually.
With BetterPayroll, you can:
- Instantly flag taxable benefits
- Auto-calculate liabilities
- Pre-fill ATO returns
- Store every exemption, receipt, and logbook in one place
In short: automate FBT now, and stay focused on running your business, not surviving tax season.
FAQs
1. Do I need to report FBT for electric vehicles (EVs)?
Only if the EV’s value exceeds $84,916 (LCT threshold) or it isn’t a zero-emission vehicle. Otherwise, qualifying EVs are fully exempt.
2. Can I provide gym memberships without paying FBT?
Only if the gym membership is provided on-site (e.g., company gym) or considered a minor benefit (<$300 infrequently). Otherwise, it’s fully taxable.
3. What if I forget to include a benefit in the FBT return?
It may trigger an ATO audit or result in underpayment penalties and interest. BetterPayroll flags unreported benefits before lodgment.
4. How do I know if a contractor should be treated like an employee for FBT?
If they:
- Work set hours
- Use your tools
- Are subject to direction
They may be considered employee-like, triggering FBT on benefits.
5. When is the FBT payment due for the 2025 year?
The payment is due by 28 May 2025, unless you’re eligible for a deferral. Returns must be lodged by 21 May (self-lodgers) or 25 June (via agent).