Fringe Benefits Tax is the area most practices wish would go away, and the one that quietly costs clients the most when it's done wrong. The FBT year runs April to March (different from the income tax year), and the rules around electric and plug-in hybrid vehicles changed materially on 1 April 2025. Here's what's verified against current ATO guidance and what you should be diarising for the FBT year ending 31 March 2026.
This article cites ATO sources inline; thresholds, rates and exemption rules change, so always confirm at ato.gov.au before relying on a specific figure. This is general guidance, not advice for a specific client situation — for those, talk to a registered tax agent.
The two dates that matter most
For the FBT year ending 31 March 2026, the ATO's lodgement guidance sets out two cut-offs:
- 21 May 2026 — FBT return and payment due if you lodge yourself.
- 25 June 2026 — FBT return and payment due if your tax agent lodges electronically on your behalf, provided you are on the agent's FBT client list by 21 May.
The 21 May date is the one practices most often forget — it's both the self-lodge deadline AND the deadline for tax agents to add new clients to their FBT lodgement program. If a new client comes on board after 21 May, the agent extension doesn't apply for that FBT year.
If the due date falls on a weekend or public holiday, the next business day applies.
The PHEV exemption ended 1 April 2025
The FBT exemption for electric cars has been one of the more generous concessions of recent years. The rules tightened on 1 April 2025 in a way that catches some salary-packaging arrangements.
Per the ATO's PHEV page:
From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under fringe benefits tax (FBT) law and isn't eligible for the electric cars exemption.
There is a transitional carve-out for arrangements that were already in place: the exemption can continue to apply if the PHEV was used, or available for use, before 1 April 2025 and there is a financially binding commitment to continue providing the use after that date. The ATO has explicitly noted it has no discretion to extend this — including for delivery delays caused by supply chain issues.
In practical terms for your client books for the FY2026 FBT year:
- PHEV first provided pre-1 April 2025 with a binding commitment continuing past that date — exemption potentially continues. Substantiate the binding commitment (the lease agreement, novation deed, etc.) carefully; the ATO has signalled this is an audit focus.
- PHEV first provided on or after 1 April 2025 — no exemption. Standard FBT applies on the car benefit.
- Any change to the original binding commitment on or after 1 April 2025 — the exemption falls away from the date of the new commitment. A renewal, a top-up, or an optional extension being exercised all break the transitional rule.
Battery-electric vehicles and hydrogen fuel-cell vehicles remain eligible for the exemption, subject to being priced at or below the luxury car tax fuel-efficient threshold ($91,387 for 2025–26 per the ATO LCT page) and being held and used for an eligible employee.
The minor benefits exemption — and the "unreasonable" test most people skip
The $300 minor benefits exemption is one of the most-used FBT concessions and one of the most misapplied. The full rule from the ATO's minor benefits exemption page:
A benefit with a notional taxable value of less than $300 is exempt if it would be unreasonable to treat the benefit as a fringe benefit.
The catch is the second half — it would be unreasonable. This is not automatic at $300; it requires the employer to consider five criteria, of which the most decisive in practice is frequency and regularity.
The ATO's own worked example makes this clear:
A weekly lunch costing $45 is not an exempt minor benefit because, even though individual lunches are worth only $45, the lunch is provided regularly and the total value of similar benefits is high, making it reasonable to treat the lunches as a fringe benefit.
What this means in practice:
- One-off chocolates and flowers under $300 — typically exempt; the unreasonable test passes.
- A Christmas party at $250 per head, once a year — typically exempt.
- Weekly Friday drinks at $40 per head, every week of the year — not exempt, even though each occasion is well under $300, because the regularity makes treating each as a fringe benefit reasonable.
- The same Christmas party plus a gift voucher plus a year-end dinner — each event is judged individually but the cumulative pattern is part of the unreasonable test.
The other criteria (per s 58P of the Fringe Benefits Tax Assessment Act): the notional taxable value of the benefit; the cumulative value of similar associated benefits; the practical difficulty of valuing; and the circumstances surrounding the provision (e.g. emergency, unanticipated event).
What we're not covering here
Some FBT areas — the otherwise-deductible rule, salary packaging arrangements, the FBT benchmark interest rate for loan fringe benefits, employee declarations and substantiation requirements, FBT-exempt employer concessions for not-for-profits — are too dependent on specific client facts to cover responsibly in a general article. The ATO publishes the current rates and thresholds on its FBT rates and thresholds for 2026 page; use those as your primary reference.
The pre-lodgement audit
If you do three things for every client before lodging FBT 2026:
- Review the EV / PHEV register. For each employee with a vehicle benefit, confirm whether the PHEV transitional rule applies (binding pre-1 April 2025 commitment) or whether the exemption has fallen away. Document the binding-commitment evidence in the file.
- Test every "minor benefit" claim against the unreasonable criteria. Don't just check that the per-benefit value is under $300 — check the frequency. Weekly anything is generally not exempt.
- Confirm the lodgement pathway. Self-lodge by 21 May, or tax-agent lodgement by 25 June — and confirm the client is on the tax agent's FBT client list before 21 May for the agent extension to apply.
This article was last reviewed against ATO guidance on the date shown in the frontmatter. FBT rates, thresholds and exemption rules change — always confirm the current figures at ato.gov.au before relying on a specific number. This article is general guidance, not specific tax advice; for client-specific questions, consult a registered tax agent.