Fringe benefits tax: the car, the ute and the Christmas party
FBT runs on its own year, at 47%, and is assessed on the employer — including a company you own.
FBT has a year of its own, 1 April to 31 March, and a rate of 47% grossed up on the value of the benefit. That rate is the reason it matters: a benefit that looks minor in dollar terms can carry more tax than paying the same amount as salary.
Cars are the most common exposure. A vehicle garaged at an employee home is available for private use and taxable on that basis, whether or not it is driven privately. The statutory formula applies 20% of the base value; the operating cost method can be far lower, but only with a valid twelve-week logbook, refreshed every five years.
Dual cab utes are not automatically exempt. The exemption for eligible vehicles requires that private use be limited to travel between home and work and other minor, infrequent and irregular use. A ute used for weekend towing fails that test, and the ATO has published safe-harbour limits on private kilometres.
Zero and low-emissions cars first held and used after 1 July 2022 can be FBT exempt where the value is under the luxury car tax threshold for fuel-efficient vehicles. The benefit is still reportable on the employee payment summary, which affects their income-tested obligations.
Entertainment and the year-end party fall under the minor benefits exemption if under $300 per person and infrequent, which most Christmas functions satisfy. Where the exemption applies, so does the loss of the income tax deduction and the GST credit — the choice is between an FBT liability and a deduction, not both.
Even where no FBT is payable, an employer registered for FBT must lodge. That includes nil returns.
General information only, current at the date shown above. It does not take your circumstances into account and is not a substitute for advice. If it applies to a decision you are about to make, .
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