ATO targeting employers who provide tax free benefits to workers

As seen in Woopi News August 2026

Fringe Benefits Tax (FBT) is a tax that can apply when an employer gives an employee a benefit on top of their normal wages or salary.

Common examples include allowing an employee to use a work car for private trips, paying for car parking, paying for entertainment, subsidised housing or paying for phone or internet bills in the employee’s name. FBT can also apply if the benefit is provided to an employee’s spouse or other family member.

The implications of FBT are often overlooked by business entities particularly where a business provides a vehicle to an employee or director that is available for private use.

The ATO data match to information from Services NSW and may flag employers for review that have vehicles registered to the business that are not FBT exempt, where an FBT Return hasn’t been lodged or an employee contribution hasn’t been recorded in the businesses tax return.

There are some exemptions including:

Minor benefits exemption – the taxable value of the benefit is less than $300 and the benefit is only provided on an occasional basis, not frequent or reoccurring.

Electric car exemption – the vehicle is a zero or low emissions vehicle such as a battery electric vehicle or hydrogen fuel cell electric vehicle. The vehicle must be car designed to carry a load of less than one tonne and fewer than nine passengers; however, hybrid vehicles are no longer included in this exemption.

Workhorse vehicle exemption – the vehicle must be either a single cab ute or a vehicle designed to carry over 1 tonne and not designed for the principal purpose of carrying passengers, a panel van or goods van, a modified vehicle (such as a hearse), a taxi, or a vehicle designed to carry more than 8 passengers. Private use of the vehicle is limited to travel between work and home and minor infrequent non work related trips totalling less than 1,000km in the FBT year or 200km for each return trip.

Any business that has employees may have FBT exposure and should register for FBT and lodge an annual FBT Return for the year ending 31st March, due in June each year.