Smarter Rewards, Lower Taxes: A Strategic Guide to Fringe Benefits in 2025

Fringe Benefits Tax is levied on non-cash benefits provided to employees (or their associates) as part of their remuneration. It’s paid by the employer not the employee and without the right approach, it can quickly add up.

The good news? Not all benefits attract FBT, and there are legal ways to reduce, exempt, or structure them to minimise your exposure. Knowing what counts, and what doesn’t, is the first step toward a more efficient benefits strategy.

 Four Smart Ways to Reduce FBT Liability

Here’s how forward-thinking employers are managing their FBT risks in 2025:

1. Apply the ‘Otherwise Deductible’ Rule

If a benefit would have been tax-deductible for the employee (had they paid for it themselves), no FBT applies. Think professional development courses, tools of trade, or industry-specific software. You’ll need employee declarations or acceptable records to substantiate the claim.

2. Use Employee Contributions

Employees can make direct contributions toward the benefit usually as a cash payment which reduces its taxable value. While it increases your assessable income, it can offset a significant FBT liability.

 Note: This doesn't apply to entertainment benefits provided by tax-exempt bodies.

3. Swap the Benefit for a Cash Bonus

Cash bonuses are subject to income tax but not FBT. In some cases, especially when benefits don’t qualify for exemptions, a bonus may be a more tax-effective reward.

4. Leverage Exempt or Concessional Benefits

Several common benefits are fully or partially exempt from FBT. Understanding and using these effectively can deliver real value to your employees without increasing your tax bill.

 Exempt Fringe Benefits Employers Should Know

These benefits are FBT-free when provided under the right conditions:

• Work-Related Items

Phones, tablets, laptops, software, briefcases, and safety gear if used primarily for work are exempt. Small businesses can even provide multiple similar devices annually under specific rules.

• Minor Benefits (Under $300)

Low-value, infrequent benefits like a movie voucher or team lunch are typically exempt if it’s unreasonable to treat them as fringe benefits.

• Emergency Assistance

Support during events like floods or bushfires such as temporary housing is FBT exempt.

• Retraining for Redundant Employees

Education provided to help an outgoing employee transition to new employment (not with you) is also exempt.

• Taxi Travel & Public Transport

Taxi trips starting or ending at work, or due to a workplace injury or illness, qualify. Some public transport benefits may also apply.

• Car Parking for Small Businesses

If parking isn’t provided in a commercial lot, and you’re a small business or specific not-for-profit, exemptions may apply.

• FBT Car Exemption for EVs

Eligible low- and zero-emission vehicles (BEVs, FCEVs, and PHEVs) first held after 1 July 2022 may qualify provided private use is limited. It’s a standout opportunity for sustainable business policies.

 Not-for-Profits: Don’t Miss These FBT Advantages

If you're a Public Benevolent Institution (PBI), Health Promotion Charity (HPC), or public hospital or ambulance service, you may be eligible for capped FBT exemptions.

In 2025:

  • PBIs & HPCs: Up to $30,000 per employee is exempt.

  • Public hospitals/ambulance: Up to $17,000 per employee is exempt.

  • Rebatable employers may also access a 47% FBT rebate, capped at $30,000 per employee.

These concessions allow NFPs to remain competitive in salary packaging, without absorbing the full tax burden.

 FBT Reporting Deadlines You Can’t Miss

2025 FBT Key Dates:

  • 31 March 2025 – End of the FBT year

  • 21 May 2025 – Paper lodgment due

  • 25 June 2025 – Electronic lodgment due via tax agent

  • 28 May 2025 – Payment due

Missing these deadlines can result in penalties, interest, and ATO scrutiny, so it’s worth reviewing your reporting process now.

 Final Thoughts: FBT Is More Than Just a Compliance Issue

Fringe benefits are a powerful way to motivate, reward, and retain great people. But like all good tools, they need to be used wisely.

Whether you're navigating new EV exemptions, optimising salary packaging, or staying compliant with ATO rules, a strong FBT strategy is a must-have in 2025.

 Ready to get ahead of your FBT obligations?

We break down the details in our full guide:
FBT Return Due Date 2025: Lodgment & Payment in Australia

If you're unsure where to start, our team at NCS Australia is here to help.
Let’s simplify your FBT planning and unlock smarter, compliant rewards for your team.

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