Fringe Benefits Australia 2026: What Employers and Employees Need to Know

Fringe benefits are non-cash perks provided to employees or their associates as a result of their employment. Common examples include:

• Company vehicles available for private use
• Low-interest loans
• Payment of personal expenses (such as school fees)
• Entertainment (like meals, event tickets, or holiday accommodation)
• Salary packaging arrangements (such as superannuation top-ups or work-related devices)
• Housing or living-away-from-home allowances

Unlike regular wages, fringe benefits are generally subject to a separate tax—FBT—which is paid by the employer. The rules around what is taxed, and what is exempt, can be complex. Some benefits are fully taxable, while others may be partially or fully exempt depending on their nature and how they are provided.

The 2024–25 financial year has brought several updates and clarifications to FBT administration and reporting. The Australian Taxation Office (ATO) continues to focus on closing compliance gaps and supporting fairer, more sustainable workplaces. Here are some of the notable developments for 2026:

Electric Vehicles (EVs)

The FBT exemption for eligible electric vehicles, first introduced in 2022, remains in place for 2026. However, the eligibility threshold has been indexed for the 2024–25 year. Only vehicles below the updated price cap are eligible for the exemption. Businesses providing EVs above this cap will need to account for FBT, while those within the cap can benefit from significant tax savings. It’s important for employers to check the current threshold and ensure their vehicle policies are up to date.

Remote Work and Home Office Benefits

With hybrid and remote work arrangements now common, the ATO has clarified how home office equipment and reimbursements are treated for FBT purposes. Items such as laptops, monitors, and ergonomic chairs provided primarily for work use may be exempt if they meet certain criteria, such as being portable electronic devices or qualifying as minor benefits. However, ongoing reimbursement of home internet or utility bills is generally considered a taxable benefit unless strict documentation is maintained. Employers should review their policies and record-keeping practices to ensure compliance.

Salary Packaging Arrangements

Salary packaging (or salary sacrifice) allows employees to receive certain benefits in place of part of their salary. The ATO is paying closer attention to these arrangements, particularly where the distinction between benefits and ordinary wages is unclear. Employers must ensure that salary packaging agreements are properly documented and comply with current standards. Failure to do so can result in penalties and unexpected tax liabilities.

Enhanced Reporting Requirements

The rollout of Single Touch Payroll (STP) Phase 2 has led to more detailed reporting of fringe benefits through payroll systems. Employees may now see reportable fringe benefits on their income statements sooner, which can affect their eligibility for government entitlements or impact obligations such as HELP debt repayments. Employers should ensure their payroll systems are updated and staff are informed about these changes.

Given the complexity of FBT and the opportunities it presents, both employers and employees can benefit from a proactive approach. Here are some practical strategies:

For Employers

• Review Benefits Annually: Regularly assess your benefits offering to ensure it remains tax-efficient and compliant with current rules.
• Leverage Exemptions and Concessions: Take advantage of FBT exemptions and concessions, especially for eligible electric vehicles, work-related devices, and minor benefits under the relevant threshold.
• Maintain Accurate Records: Keep thorough documentation for all benefits provided, including logbooks for vehicles and receipts for expense payments. Good record-keeping is essential for demonstrating compliance if reviewed by the ATO.
• Educate Staff: Make sure employees understand how reportable fringe benefits may affect their taxable income and eligibility for government benefits.

For Employees

• Explore Salary Packaging: Ask your employer about salary packaging options. Arrangements such as superannuation top-ups, portable electronics, and novated leases can increase your take-home value.
• Monitor Reportable Fringe Benefits: Be aware of the ‘reportable fringe benefits’ figure on your income statement, as it can influence family tax benefits, childcare subsidies, and HELP debt repayments.
• Keep Detailed Records: If you use a company car or receive other benefits, maintain accurate records (such as logbooks) to support business-use claims and potentially reduce FBT liability.

Understanding how different types of benefits are treated can help both employers and employees make informed decisions. Here’s a summary of some common fringe benefits:

Company Cars

Providing a company car for private use is one of the most common fringe benefits. The FBT liability depends on factors such as the type of vehicle, its value, and how much it is used for business versus private purposes. Electric vehicles below the current threshold may be exempt, but accurate logbooks are essential for substantiating business use.

Work-Related Devices

Laptops, tablets, and other portable electronic devices provided primarily for work use may be exempt from FBT if they meet certain criteria. Employers should ensure these devices are used mainly for work and keep records to support the exemption.

Entertainment and Expense Payments

Benefits such as entertainment (meals, tickets, accommodation) and payment of personal expenses are generally subject to FBT. However, minor benefits under a certain value may be exempt if provided infrequently and irregularly.

Housing and Living-Away-From-Home Allowances

Housing benefits and living-away-from-home allowances can attract FBT, but there are specific rules and potential concessions for employees who need to live away from their usual residence for work purposes. Employers should review the latest guidelines to determine eligibility for any concessions.

The ATO’s data-matching capabilities are expanding, and FBT remains a significant area of focus. Employers can expect increased scrutiny of their fringe benefits arrangements, especially where benefits are not clearly documented or where salary packaging is involved. Non-compliance can result in penalties and unexpected tax liabilities.

However, with careful planning and attention to detail, employers can use fringe benefits to create a more attractive workplace while managing their tax obligations. Employees, in turn, can benefit from a better understanding of how these perks affect their overall financial situation.

Fringe benefits will continue to play an important role in Australian workplaces in 2026 and beyond. By staying informed about the latest rules, leveraging available exemptions, and maintaining meticulous records, both employers and employees can make the most of these opportunities while minimising risks.

For more insights on workplace finance and benefits, explore our finance section or learn about protecting your home office with home insurance.