The ATO is intensifying its focus on fringe benefits tax (FBT), with increased reviews, data matching, and crackdowns on non-lodgers signalling that FBT can no longer be treated as a low-priority compliance area.
For the FBT year ended 31 March 2026, employers should expect closer scrutiny on key risk areas, including the “minor and infrequent” exemption, entertainment expenses, dual cab utes, business travel, benefits provided to business owners, and journalised employee contributions.
Recent Federal Court decisions have also reshaped the FBT landscape. One notable case confirmed that business owners and directors can fall within the extended definition of “employee”, meaning benefits provided to them may attract FBT.
The ATO is also tightening its position on journalised employee contributions. These arrangements will only be effective where there is clear evidence of a genuine obligation between employer and employee, supported by properly documented set-off agreements.
Employers should also take care when applying the minor benefits exemption. While benefits under $300 may qualify, they must also be provided infrequently, regular provision of gift cards or meals may still trigger FBT.
Similarly, dual cab utes are not automatically FBT-exempt. Exemptions apply only where the vehicle meets eligibility criteria and private use is strictly limited. Regular personal use could result in an FBT liability.
With increased ATO enforcement and evolving case law, businesses should take a proactive, well-documented approach to managing FBT risks and compliance.