Fringe benefits tax (FBT) has a reputation for complexity — and that reputation is earned. But one of the most practical skills a bookkeeper can develop is knowing which benefits are exempt from FBT entirely. Exempt benefits do not need to be reported on the FBT return, do not generate an FBT liability, and are often treated differently for income tax deductibility as well.
Getting this right matters in both directions. Missing an exemption means the client overpays FBT — sometimes significantly. Incorrectly applying an exemption where one does not exist creates an understatement that can attract ATO attention at audit.
This guide covers the major FBT exemptions a bookkeeper encounters in practice, with practical notes on coding treatment for each.
The $300 minor benefits exemption
The most frequently used exemption in everyday bookkeeping is the minor benefits exemption under section 58P of the FBTAA.
A benefit is exempt from FBT if:
- The taxable value of the benefit (to that employee, in respect of that occasion) is less than $300
- It would be unreasonable to treat it as a fringe benefit having regard to the infrequency and irregularity with which similar benefits are provided, and other factors
The $300 threshold is applied per benefit, per employee, per occasion — not as an annual cap across all benefits provided to an employee. However, the ATO will look at frequency. A $250 dinner provided to the same employee every month is unlikely to satisfy the "infrequent and irregular" test; a $250 birthday voucher provided once a year almost certainly would.
Bookkeeping treatment: Benefits coded to minor benefits accounts should be documented with the date, employee, nature of the benefit, and the value. Do not simply code them to general expenses. A separate nominal account — "Minor Benefits (FBT Exempt)" — makes it easy to review at year-end and confirm the minor benefits conditions were genuinely met for each item.
GST: If the employer purchased the benefit from a GST-registered supplier, the input tax credit is still claimable even though the benefit is FBT-exempt.
Work-related items: portable electronic devices and tools
Under section 58X of the FBTAA, certain work-related items provided to employees are FBT-exempt. The most relevant categories for bookkeepers are:
Portable electronic devices
Laptops, tablets, mobile phones, portable printers, and similar devices are FBT-exempt when primarily for work use. There is a limit of one exempt device per type per FBT year per employee — so providing an employee with two laptops creates an FBT liability on the second one.
Small businesses (aggregated turnover under $50 million) are permitted to provide more than one device of the same type per employee without FBT, as long as each device has substantially different functions. A phone and a laptop are different types; two laptops are not, regardless of specifications.
Bookkeeping treatment: Code to the relevant asset account (for items meeting the capitalisation threshold) or expense account (for items below the threshold) with GST ITC. Maintain a register of exempt devices provided per employee per year — this is your evidence base if the ATO queries whether the one-per-type limit was observed.
Tools of trade
Tools provided primarily for use in the employee's employment are also FBT-exempt under section 58P. This covers trade tools used by tradespeople, measuring equipment for technical staff, and similar items.
The "primarily for work" test is the critical condition — if the employee will use the item mainly for personal purposes, the exemption does not apply.
Car parking exemptions
Car parking benefits provided to employees are normally subject to FBT under the car parking benefit rules. However, there are exemptions that apply in specific circumstances.
Small business car parking exemption
An employer is exempt from FBT on car parking if:
- The employer's gross total income for the year is below $10 million (note: this threshold is set by ATO determination and should be verified each year)
- The parking is not provided in or near a commercial parking station
- The parking is not provided in a major metropolitan area where commercial parking stations in the vicinity charge a commercial rate
For clients outside major CBDs — particularly regional Australia — this exemption is more commonly available than many practices realise.
No commercial parking stations nearby
Even for larger employers, the FBT car parking rules only apply if a commercial parking station within a one-kilometre radius of the employer's premises charges for all-day parking. If no such station exists, there is no FBT liability on car parking regardless of employer size.
Bookkeeping treatment: Where the exemption applies, code car parking costs provided to employees as a business expense (N-T or GST depending on the nature of the cost) with no FBT liability accrued.
Exempt benefits for work-related expenses
Under the otherwise deductible rule, benefits that relate to expenditure the employee could have claimed as a deduction if they had paid for it themselves reduce the FBT taxable value to nil. In practice, this operates as an exemption for:
- Work-related education and training paid by the employer — where the course maintains or improves skills required in the employee's current role
- Professional memberships and association fees — where membership is a condition of employment or required for the employee's role
- Home office equipment used exclusively for work
The key test is whether the employee would have been entitled to claim a deduction for the exact amount if they had paid it themselves. Partial work use means partial reduction, not a full exemption.
Bookkeeping treatment: Code to the relevant expense account (training, professional fees, etc.) with GST ITC where applicable. Document the work-related purpose at the time the benefit is provided — it is much harder to reconstruct this evidence later.
Employee share scheme interests
Benefits provided under an employee share scheme (ESS) registered under the relevant tax provisions are excluded from FBT. The tax treatment of ESS interests is governed by Subdivision 83A of the ITAA 1997, not the FBT Act — meaning shares, rights, and options granted under qualifying ESS arrangements sit outside the FBT framework entirely.
Bookkeeping treatment: ESS-related journal entries — recording the issue of shares, recognising the deferred tax asset (if applicable), and recording the ESS expense — should be prepared by the tax adviser or accountant, not the bookkeeper. The bookkeeper's role is to ensure that cash outflows related to ESS (e.g., administration fees, legal costs for scheme documentation) are coded separately from the ESS benefit itself and not confused with FBT payments.
Briefing clients on exempt benefits
One of the most useful things a bookkeeper can do is run through the exempt benefits list with clients at the start of each FBT year (1 April). Many employers — particularly those with 5–30 employees — are providing benefits they believe attract FBT when they are actually exempt.
Common examples of over-reported or over-accrued FBT that turn out to be exempt:
- Providing staff with laptops or phones (exempt, primary work use)
- Annual staff Christmas gifts under $300 (minor benefits, likely exempt)
- Paying for a work-related course (likely exempt under otherwise deductible rule)
- Paying professional association fees (likely exempt under otherwise deductible rule)
Document the exemption position, keep the evidence, and flag anything ambiguous to the tax agent before the FBT return is prepared.
What bookkeepers cannot determine
Identifying that a benefit might be exempt is within a bookkeeper's scope. Confirming that it is exempt — particularly for complex arrangements like salary sacrificed vehicles, living-away-from-home allowances, or remote area benefits — requires advice from a registered tax agent. When in doubt, code the benefit separately and flag it for the tax agent's review rather than coding it as exempt without confirmation.
This article was last reviewed on 19 November 2026. FBT rates, thresholds, and exemption conditions are updated annually. Always confirm current rules at ato.gov.au/fbt. This is general guidance, not specific tax or legal advice.