The Australian Taxation Office (ATO) has recently introduced several updates to Fringe Benefits Tax (FBT) for the current FBT year finishing 31 March 2025, impacting employers and employees alike.

This article outlines the key updates to reportable fringe benefits, transport expenses, living allowances, plug-in hybrid vehicle exemptions and alternative record-keeping options.

Reportable Fringe Benefits

While the private use of an eligible electric car is exempt from FBT, its value must still be considered when determining an employee’s Reportable Fringe Benefits Amount (RFBA). Employers must calculate the notional taxable value of benefits associated with the private use of the exempt electric car.

An employee has an RFBA if the total taxable value of certain fringe benefits provided to them (or their associate) exceeds $2,000 in an FBT year. This amount must be reported through Single Touch Payroll or on the employee’s payment summary.

Although the RFBA does not affect an employee’s taxable income for income tax and Medicare Levy liabilities, it is included in income tests for Medicare Levy Surcharge liability, family assistance eligibility, child support assessments, and other government benefits.

FBT & Transport Expenses

According to Taxation Ruling TR 2021/1, transport expenses incurred by employees are deductible only if they arise directly from their employment duties. Travel between home and a regular workplace is not deductible, regardless of:

• Performing work tasks at home for convenience
• Living far from the workplace
• Completing work tasks during the commute (e.g., checking emails on the train)

Deductible travel expenses includes:

• Trips from home to a different work location (e.g., visiting a client’s office)
• Travel between different work locations (e.g., from an office to a job site)

Employers should refer to the ATO website, or Taxation Ruling TR 2021/1 and PCG 2021/3 for further details.

FBT: Living at Location Allowance, Accommodation & Food & Drink Expenses

Taxation Ruling TR 2021/4 outlines five key factors for determining whether an allowance or benefit relates to living at a location:

1. A change to the employee’s regular place of work (e.g., relocation for a project)
2. The duration of time away from usual residence
3. Whether the provided accommodation becomes their usual residence
4. The ability of family and friends to visit or stay

Employers must assess each employee’s situation individually when determining eligibility for such allowances. Further information can be found on the ATO website, or in TR 2021/4 and PCG 2021/3.

Plug-In Hybrid Vehicles and FBT Exemptions

From 1 April 2025, plug-in hybrid vehicles will no longer be classified as zero or low-emission vehicles and will not qualify for an FBT exemption. However, if a plug-in hybrid vehicle is in use before this date under a financially binding commitment (e.g., a novated lease agreement), it will remain exempt. If this agreement is altered (e.g., an employee leaves, lease payments change, or the employer changes), the exemption will cease.

Alternative Records for FBT Returns

From 1 April 2024, employers have greater flexibility in record-keeping for certain benefits, allowing them to:

1. Use existing corporate records
2. Continue using current approved forms
3. Use a combination of both methods

Employers opting for alternative records must ensure they meet the minimum information requirements when lodging FBT returns. The ATO accepts these records as substitutes for travel diaries and certain employee declarations.

Eligible records include:

• Travel diaries
• Living-away-from-home allowances
• Otherwise deductible rule applications (e.g., expense payments, vehicle use)
• Remote area and overseas holiday transport
• Relocation transport and accommodation

Employers can refer to the ATO’s legislative instruments for further details.