How to Lodge Your Fringe Benefits Tax Return

Managing your Fringe Benefits Tax (FBT) obligations can feel overwhelming for many Australian business owners. With specific deadlines, complex calculations, and detailed record-keeping requirements, it’s easy to feel stressed as the end of the FBT year approaches. Whether you’re providing fringe benefits such as a company car, car parking facilities, gym membership, or other non-cash benefits to your employees, understanding how to correctly lodge your FBT return is crucial for compliance and potentially reducing your tax burden.

Understanding Fringe Benefits Tax Basics

FBT is a tax that employers pay on some benefits they give to employees or their associates, instead of on salary or wages. Examples include salary packaging, company cars, or car parking provided outside of regular pay. The FBT year runs from 1 April to 31 March, which is different from the usual financial year.

A fringe benefit is any benefit provided to an employee, their family, or associates in respect of their employment, that is not salary or wages. For example, allowing employees to use a company car (including a motor vehicle or dual cab ute) for private purposes, providing car parking facilities at or near the workplace, paying for a gym membership or other work related items, offering entertainment such as free concert tickets, reimbursing personal expenses incurred by employees, or offering discounted loans and salary sacrifice arrangements are all considered fringe benefits.

Not all benefits are subject to FBT. Superannuation contributions to complying funds, shares under approved employee share schemes, and employment termination payments are not considered fringe benefits for FBT purposes and are instead managed under the income tax or tax assessment act 1986.

Fringe benefits tax applies to benefits provided to current, future, or past employees, as well as company directors and trust beneficiaries who are involved in the business. However, if you’re a sole trader or a partner in a partnership, benefits you provide to yourself are not subject to FBT since you are not considered an employee for these purposes.

Determining Your FBT Liability

Before lodging your FBT return, you need to determine if you have an FBT liability for the period. This involves identifying all fringe benefits provided during the FBT year and calculating their taxable value.

Start by reviewing all benefits provided to employees during the FBT year, including both regular and one-off benefits such as a company car, car parking, or gym membership. The value of the benefit, or taxable value, is calculated differently depending on the type of benefit. For example, car fringe benefits can be calculated using either the statutory formula method (based on the actual value of the car) or the operating cost method (based on the expense incurred in running the vehicle). Loan fringe benefits are calculated by comparing the interest charged to the benchmark interest rate set by the ATO, while housing fringe benefits are determined based on the market rental value minus any contribution paid by the employee.

Once you have the taxable value for each benefit, you need to apply the correct gross up rate. This grossed up value reflects the gross salary an employee would need to earn to purchase the benefit after paying income tax and the medicare levy. There are two gross up rates used for FBT: the Type 1 gross up rate (2.0802) is used when the employer can claim a GST credit for the benefit, and the Type 2 gross up rate (1.8868) is used when GST credit cannot be claimed.

For example, if you provide a company car with a taxable value of $10,000 and you can claim a GST credit, the grossed up value is $10,000 × 2.0802 = $20,802. The FBT payable, using the current FBT rate of 47%, would be $20,802 × 47% = $9,777.

Employers must also consider reportable fringe benefits. If the aggregate fringe benefits amount provided to an employee exceeds $2,000 (grossed up), you must report this on their payment summary. This amount is not subject to income tax for the employee, but it may affect certain benefits and obligations, such as child support and medicare levy surcharge.

Preparing for FBT Lodgment

Proper preparation is essential for accurate and timely FBT lodgment. Being aware of key dates and gathering the right information will help make the process smoother.

The key deadlines for the 2025 FBT year are as follows. The FBT year ends on March 31, 2025. The lodgment and payment deadline for self-lodgers is May 21, 2025, while the extended lodgment deadline for tax agents lodging electronically is June 25, 2025. If this is your first time using a tax professional for FBT, ensure you’re on your agent’s FBT client list by May 21 to be eligible for the extended deadline.

Good record-keeping is the foundation of FBT compliance. You need to keep records that clearly identify all fringe benefits provided, support your valuation of these benefits-including the notional taxable value and actual value-substantiate any FBT exemption or reductions claimed, and document any contribution paid by employees.

For the 2025 FBT year, the ATO introduced new flexibility in record-keeping. Employers can now use different forms of existing corporate records, such as travel reimbursement claims, work schedules, corporate credit card statements, and vehicle logbooks, to support their FBT calculation instead of traditional declarations. However, these records must still be accurate, complete, and clearly linked to the specific fringe benefits provided. If the ATO finds your records insufficient, you may lose tax concessions and face reassessment of your benefits tax assessment.

Before lodging your return, gather all necessary information, including details of all fringe benefits provided during the FBT year, documentation supporting your valuation methods and notional taxable value, information about any contribution paid by employees, details of any FBT exemption or concessions being claimed, and your current financial institution details for any potential refund.

Step-by-Step Guide to Lodging Your FBT Return

With your information ready, here’s how to lodge your FBT return.

1. Register for FBT (if necessary)

If this is your first time with an FBT liability, you need to register for FBT. You can do this by asking your tax agent to register on your behalf, calling the ATO directly, or completing the online registration form.

2. Obtain the FBT Return Form

The FBT return form for the 2025 FBT year (NAT 1067) can be downloaded from the ATO website, ordered as a paper form, or accessed through your tax agent.

3. Complete the FBT Return

You’ll need to provide details about your taxable fringe benefits, the gross up rate applied, and the aggregate fringe benefits amount. The form also asks for any exempt benefits provided, such as minor benefits or work related items, the calculated FBT payable, and instalment amounts already paid if applicable. Make sure to include your current financial institution details to ensure any refund is paid directly to your account.

4. Choose Your Lodgment Method

Options for lodging your FBT return include paper lodgment by completing the form and mailing it to the ATO, electronic lodgment using SBR-enabled software, or lodging through a tax agent who can submit electronically for you. Electronic lodgments are generally processed faster than paper returns. When sending paper returns, use the address: Australian Taxation Office, GPO Box 9845, [YOUR CAPITAL CITY] [STATE] [POSTCODE].

5. Pay Your FBT Liability

Payment must be made by the due date, which is May 21, 2025 for self-lodgers and June 25, 2025 if lodged electronically by a tax agent. Payment options include BPAY, credit/debit card, direct credit transfer, or mail (cheque). If you do not have an FBT liability and are not registered for FBT, you do not need to lodge a return. If you are registered but have no liability, submit a “Fringe Benefits Tax – Notice of Non-Lodgment” by the deadline to avoid follow-up.

Understanding FBT Exemptions and Concessions

Taking advantage of applicable FBT exemptions and concessions can reduce your FBT liability. Knowing which ones apply to your circumstances is key to minimising your benefits tax.

For example, the minor benefits exemption allows you to exclude benefits valued at less than $300 (including GST) per employee, provided on an infrequent and irregular basis. This could include a Christmas hamper or a one-off gift card. Work related items such as portable electronic devices, computer software, and protective clothing may be exempt if provided mainly for work purposes. The otherwise deductible rule lets you reduce the taxable value of a benefit if an employee would have been entitled to an income tax deduction for the expense incurred had they paid for the benefit themselves. Remote area concessions apply to certain benefits provided to employees living in designated remote areas, and small businesses with revenue under $10 million that provide car parking facilities to employees may be exempt from FBT.

Employee contributions paid towards a benefit can reduce or eliminate your FBT liability. When an employee makes a contribution, this amount is deducted from the taxable value of the benefit. To apply these exemptions, make sure you maintain proper documentation for all benefits provided, understand the specific conditions for each exemption, keep records of all employee contributions, and review exemptions annually as eligibility may change.

Common FBT Lodgment Mistakes to Avoid

Even with careful preparation, mistakes can happen when lodging your FBT return. Being aware of common pitfalls can help you avoid issues with your fringe benefits tax assessment.

Miscalculating taxable values is a frequent issue, so use the correct valuation method for each benefit and apply the right gross up rate. Don’t overlook reportable fringe benefits-if the aggregate fringe benefits amount exceeds $2,000 (grossed up), it must be reported even if the benefit is exempt from FBT. Inadequate record-keeping can make it difficult to support your claims if the ATO requests evidence. Not all motor vehicles or utes are automatically exempt from FBT, so be sure to check the rules. Missing lodgment deadlines can result in penalties and interest, and only claim an FBT exemption if you meet all requirements. Finally, forgetting to include current financial institution details can delay any refund you are owed.

How a Tax Professional Can Help

Given the complexity of fringe benefits tax, working with a tax professional can save you time, reduce stress, and help you meet your obligations under the benefits tax assessment act. A professional can help you identify all fringe benefits provided during the FBT year, advise on available exemptions and concessions, ensure accurate calculation of taxable value and notional taxable value, and assist with record-keeping and documentation. They can also guide you on structuring salary sacrifice and salary packaging arrangements, represent you in case of ATO inquiries or audits, and help you take advantage of the extended lodgment deadline.

At ACT Tax Group, we understand that managing FBT, payroll tax, and other tax obligations while running your business can be challenging. Our team is here to help you with every aspect of your fringe benefits tax assessment, so you can focus on growing your profit and supporting your employees.

Conclusion

Lodging your FBT return doesn’t have to be a daunting task. With the right understanding, preparation, and record-keeping, you can ensure compliance while reducing your FBT liability through available exemptions and concessions.

Key reminders include identifying all fringe benefits provided during the FBT year, calculating the taxable value and grossed up value for each benefit, taking advantage of new record-keeping options and keeping accurate documentation, understanding and applying relevant FBT exemptions and concessions, lodging your return and paying by the deadline, and maintaining records to support your calculations and claims.

If you’re feeling overwhelmed by FBT compliance or want to make sure you’re not paying more than necessary, consider reaching out for professional help. The right advice can help you meet your obligations, manage your benefits tax, and discover opportunities for savings.