Fringe Benefit Tax (FBT) 2025: Increased ATO Scrutiny and Key Risks to Watch

Cogger Gurry • April 15, 2025

The 2025–26 Federal Budget has reinforced the Albanese Government’s commitment to tax compliance, with a major boost in funding to the ATO to strengthen enforcement—including Fringe Benefits Tax (FBT).

With that extra funding comes increased ATO scrutiny on employers. If you're responsible for FBT compliance, now’s the time to get your house in order.


High-Risk Areas Under the ATO Microscope :


🚗 Car Fringe Benefits

  • Incorrect vehicle classification (especially dual cab utes and SUVs).
  • Invalid or poor-quality logbooks.
  • Incorrectly treating private use (e.g. home to work, errands) as business use.
  • Misuse of the statutory formula method.


🍽️ Meals & Entertainment

  • Misunderstanding what qualifies as deductible vs. entertainment.
  • Inadequate documentation for functions or staff events.
  • Incorrect application of the "otherwise deductible" rule.


⚡ Electric and Plug-in Hybrid Vehicles

From 1 April 2025, PHEVs lose their FBT exemption unless:

  • The car was in use before 1 April 2025, and
  • There is a binding agreement to continue use post-1 April.

Many employers are still unaware of these transitional rules.

 

🚨 What the ATO Is Watching

  • Nil or non-lodged returns where fringe benefits were likely provided.
  • Incorrect treatment of employee contributions.
  • Mismatches between FBT and income tax reporting.

Penalties can be up to 75% of the shortfall, so it pays to be proactive.

 

✅ What You Should Do

  • Review the benefits you've provided in the 2025 FBT year.
  • Reassess logbooks, vehicle use, and entertainment records.
  • Seek advice on grey areas like PHEVs or meal benefits.
  • Lodge and pay on time.

 

📞 Need help reviewing your FBT exposure before the deadline? Get in touch today—we’re here to help you stay compliant and penalty-free.


Read more about this on our website HERE or give us a call on 03) 5571 0111


📅 Key FBT Dates for 2025

  • FBT year ends: 31 March 2025
  • Lodgment due (paper): 21 May 2025
  • Lodgment due (tax agent): 25 June 2025
  • Payment due: 28 May 2025


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