What’s New in Fringe Benefits Tax: What Employers Need to Know

If your business offers non-cash perks — company cars, meal entertainment or car parking, for example — to employees, you're probably already familiar with Fringe Benefits Tax (FBT). But with Australian Taxation Office (ATO) guidance for the 2025 FBT year now in effect, it's more important than ever to understand how these updates could impact your compliance and how you manage your records.

Here's what you need to know about the key FBT changes for 2025 and how they affect your business.

Updated Guidance on Record-Keeping

One of the most important changes for 2025 is the ATO's revised approach to substantiating FBT claims. You're no longer required to rely solely on separate declarations or statutory evidentiary documents. Instead, the ATO now allows you to use existing business records, such as rosters, travel logs, or expense management software, to demonstrate your eligibility for FBT exemptions or reductions.

According to the ATO's 2025 Fringe Benefits Tax Return Instructions, this approach is intended to reduce administrative burden. However, your records must still be complete, detailed and accurate.

This shift is good news for small and medium-sized employers using digital systems to track employee activity, travel, or expenses. However, it also raises the bar in terms of how clean and consistent your records need to be.

More Oversight from the ATO

Alongside these updates, the ATO ramped up its scrutiny of FBT reporting. There is increased focus on car-related benefits, living-away-from-home allowances and reimbursements. This includes expanded data-matching across employers, financial institutions and government records.

With the ATO collecting about $4.1 billion in FBT revenue in the 2022–23 financial year, the pressure is on to ensure compliance. Even minor errors or oversights can trigger audits or penalties, making it important to be proactive.

Common Traps to Avoid

Some of the most frequent issues flagged in FBT reviews include incorrectly classifying benefits, failing to obtain employee declarations and underestimating the taxable value of non-cash perks. Employers often assume that small or irregular benefits don't need to be reported, but that's not always the case. The minor benefits exemption, for instance, has strict rules around value, frequency and regularity.

It's also easy to overlook fringe benefits provided through third parties or contractors, especially when reimbursements or allowances are involved. Reviewing your benefit arrangements at least annually can help you catch these potential issues before they become costly mistakes.

Whether you're navigating these changes for the first time or updating existing systems, getting professional guidance can save time and reduce risk. WMC Accounting helps businesses stay compliant with evolving FBT rules. Contact us today to make sure your FBT obligations are up to date and under control.