The Australian Taxation Office has outlined four critical steps businesses must follow to meet their fringe benefits tax obligations for the year ending 31 March 2026, with key deadlines including lodgement by 21 May 2026 and employee reporting by 14 July 2026.
The Australian Taxation Office (ATO) has released a notice on 26 March 2026 outlining four essential steps for businesses to comply with their fringe benefits tax (FBT) obligations for the year ending 31 March 2026.
The FBT year runs from 1 April 2025 to 31 March 2026.
A smoother FBT tax time starts with getting it right from the beginning. These four key steps will assist in confidently meeting FBT obligations and help with staying compliant.
- Identify the fringe benefits: Start by working out what employee perks have been provided and what type of fringe benefits they are. Don’t skip this step – it’s essential to help understand what records need to be kept and to calculate liability correctly. Employees should be asked: has the work vehicle been taken on a weekend getaway to the coast? If so, it could mean FBT applies.
- Determine the taxable value: Use the relevant calculation methods to work out the taxable value for each fringe benefit provided. This will help calculate the total taxable amount and FBT liability correctly.
- Keep accurate records: Ensure the right records are kept to support the FBT position. The type of records that need to be kept will depend on the fringe benefit provided. Records should also show calculations and support any exemptions or concessions claimed.
- Lodge, pay and report: Make sure to lodge and pay the FBT return on time by 21 May 2026. If a tax agent is being used, there may be until 25 June 2026.
There may also be a need to report any reportable fringe benefits amounts for employees by 14 July 2026.
Understanding fringe benefits tax (FBT)Â
FBT is a levy that employers pay on non-cash perks they provide to employees and their associates. Unlike income tax, which employees pay on their wages, FBT is the employer’s responsibility and is calculated based on the benefit’s taxable value.
Fringe benefits are non-cash perks employers provide to staff, such as company cars for personal use, parking, gym memberships, entertainment tickets, expense reimbursements, and discounted loans.
Regular wages, superannuation, approved share schemes, termination payments, and benefits to contractors or volunteers don’t count as fringe benefits.
It’s important to note that sole traders and partnership members cannot provide fringe benefits to themselves, as they’re not classified as employees. Similarly, perks given to clients fall outside FBT’s scope since clients aren’t employees.
