ATO flags key updates for FBT tax time this year

In a recent update, the ATO has highlighted recent changes and areas of focus for fringe benefits tax ahead of the end of the FBT year on 31 March.

Employers that provide plug-in hybrid electric vehicles (PHEVs) to employees for private use should be aware that changes to the electric car exemption could affect their FBT obligations, the ATO said.

"Since 1 April 2025, PHEVs are no longer eligible for the electric car exemption, unless you meet the specific eligibility requirements," it said.

"This means you may now have an FBT liability for the 2025–26 FBT year, if you've continued providing a PHEV for employees' personal use."

The ATO said many businesses still provide fringe benefits without realising it.

It reminded employers that fringe benefits are non-cash perks provided to employees or their family members and associates in addition to their wages or salaries.

"The most common example is providing a work vehicle that's used for personal purposes, which includes when it's garaged at an employee's home," it said.

"If your employees use work vehicles privately, take the time to understand your obligations so you can lodge correctly and stay compliant."

The Tax Office also reminded employers that, if employees charge PHEVs at home, the shortcut method can be used to calculate home-charging electricity costs.

"You can opt to use this method if you're eligible, or you can continue to use the actual electricity costs," it said.

The ATO also warned that it would increase its focus on employers who may be overlooking or misreporting FBT on the private use of work vehicles when they are used for personal purposes.

"Check the steps you need to take to report correctly and stay compliant. Getting it right now can help you avoid potential audits, penalties and interest charges," it said.

Some of the other areas attracting the ATO's attention include lodging a nil FBT return when fringe benefits were provided, and incomplete or invalid records to support exemptions or concessions used, or to show how the taxable value of benefits was calculated.

The ATO would also be closely monitoring any incorrect reporting of employee contributions to reduce FBT liabilities or reporting at the incorrect label on the income tax return.

The Tax Office said it was also still coming across many businesses that provide fringe benefits and don't realise it.