FBT Calculator Australia 2025-26

What Is Fringe Benefits Tax?

Fringe Benefits Tax (FBT) is an Australian tax paid by employers who provide non-cash benefits to their employees, or to associates of their employees. Unlike income tax, FBT is paid by the employer, not the employee. Common fringe benefits include company cars, private health insurance, entertainment, housing, and expense payments. The FBT year runs from 1 April to 31 March, separate from the standard financial year. For the 2025-26 FBT year, the FBT rate is 47%, which corresponds to the top marginal income tax rate (45%) plus the Medicare levy (2%). Employers must lodge an FBT return and pay any liability by the relevant due dates set by the Australian Taxation Office (ATO).

Type 1 vs Type 2 Benefits

The distinction between Type 1 and Type 2 fringe benefits determines the gross-up rate applied to calculate the FBT liability. Type 1 benefits are those where the employer can claim a GST credit for the benefit provided. These use a higher gross-up rate of 2.0802, reflecting the GST component. Type 2 benefits are those where no GST credit is available, and they use a lower gross-up rate of 1.8868. For example, if an employer provides a car with GST credits claimable, it is a Type 1 benefit. If the employer pays for an employee's rent (which is GST-free), it is a Type 2 benefit. Correctly identifying the benefit type is essential for accurate FBT calculations. Based on ATO rates for 2025-26, updated April 2026.

FBT Exemptions and Concessions

Certain employers are eligible for FBT exemptions or rebates. Public benevolent institutions, health promotion charities, and some other charities may be exempt from FBT up to a capping threshold of $30,000 per employee per FBT year (grossed-up taxable value). Rebatable employers, including certain not-for-profit organisations such as public and not-for-profit hospitals and ambulance services, receive a 47% rebate on the FBT they would otherwise pay, up to a grossed-up cap of $30,000 per employee. Some benefits are also individually exempt from FBT regardless of employer type, including work-related items (laptops, briefcases, tools of trade), minor benefits under $300, and certain car parking and meal entertainment benefits depending on the employer category.

How FBT Affects Employee Income

While FBT is paid by the employer, fringe benefits can still affect the employee through reportable fringe benefits amounts (RFBA). If the total grossed-up taxable value of fringe benefits provided to an employee exceeds $2,000 in an FBT year, the employer must report the amount on the employee's income statement (formerly payment summary). Although the RFBA is not included in taxable income, it is used to calculate certain income-tested obligations such as Medicare Levy Surcharge, HELP/HECS repayment thresholds, child support, Centrelink payments, and private health insurance rebate eligibility. Employees receiving significant fringe benefits should account for these impacts when planning their finances. Employers should also consider the total cost of providing fringe benefits, including the FBT liability, when structuring remuneration packages.