The 2026-27 FBT year runs from 1 April 2026 to 31 March 2027. Most of what decides the FBT bill for the year, from the logbooks and odometer readings to employee contributions and how each benefit is classified, has to be in place before 31 March, so the months leading up to it are the time to review your position.
Fringe benefits tax applies when a business provides benefits to employees or directors outside their salary or wages. Company cars are the familiar example, although a wide range of everyday arrangements can create a liability, including entertainment, loans and personal expenses paid through the business.
The FBT year and the dates that matter
The FBT year runs from 1 April to 31 March, which is why it sits out of step with the income tax year. For the year ending 31 March 2027, the FBT return is due to be lodged and paid by 21 May 2027. Where a tax agent lodges the return electronically, the due date is generally 25 June 2027, provided the business is on the agent's FBT client list by 21 May.
The FBT rate stays at 47 per cent for the 2026-27 year, with gross-up rates of 2.0802 for Type 1 benefits, where the employer can claim a GST credit, and 1.8868 for Type 2 benefits, where it cannot. A business whose FBT liability for the previous year was $3,000 or more pays FBT in quarterly instalments through its activity statements.
The rates and thresholds that changed for 2026-27
Several figures moved from 1 April 2026, and using last year's numbers is the easiest way for an otherwise sound calculation to go wrong.
| Item | Year ending 31 March 2026 | Year ending 31 March 2027 |
|---|---|---|
| Benchmark interest rate (loans, operating cost method) | 8.62% | 8.27% |
| Car parking threshold, per day | $11.03 | $11.48 |
| Record keeping exemption threshold | $10,664 | $10,962 |
| EV home charging rate | 4.20 cents per km | 5.47 cents per km |
| Luxury car tax threshold, fuel-efficient vehicles (financial year) | $91,387 (2025-26) | $91,661 (2026-27) |
The car statutory formula rate is unchanged at 20 per cent of the car's base value. Our FBT on cars guide covers the car figures in detail, including worked examples.
Benefits that commonly create an FBT liability
FBT applies to a benefit provided in respect of employment, and that definition is broad. The arrangements worth reviewing each year include:
- cars available for private use, including travel between home and work
- dual cab utes where private use goes beyond what the exemption allows
- personal expenses paid or reimbursed by the business
- staff entertainment, including end of year functions and event tickets
- loans to employees or directors at no interest or below the benchmark rate
- novated lease arrangements
- car parking near a commercial parking station charging more than the threshold
A single benefit of modest value can still create a liability where no exemption applies, so it is worth listing everything provided during the year before deciding what is reportable.
Cars and the choice of method
Where a car is available for private use, its taxable value is worked out using either the statutory formula method or the operating cost method, and the choice can make a significant difference to the FBT payable.
The statutory formula method
The statutory formula method applies 20 per cent to the car's base value, whatever the split between business and private use. It needs no logbook and is simple to administer, which is why many employers use it, although for a car used mostly for work it usually produces a higher taxable value than the alternative.
The operating cost method
The operating cost method takes the car's actual running costs, including fuel, servicing, insurance, registration and deemed depreciation and interest, and taxes only the private use percentage. It relies on a valid logbook kept for at least 12 continuous weeks that reflects the car's normal pattern of use, which can generally be relied on for up to five years while that pattern holds, along with odometer readings at the start and end of each FBT year.
A logbook has to be kept at the time and cannot be reconstructed afterwards, so if the operating cost method is likely to suit a car for 2026-27, the logbook period needs to start well before 31 March 2027.
Dual cab utes
A dual cab ute qualifies for the work-related use exemption only where it is not designed principally to carry passengers, which turns on its load capacity and design, and where private use is limited to travel between home and work, incidental travel in the course of work and other private use that is minor, infrequent and irregular. A ute used for weekends away or regular private trips falls outside the exemption even where most of its use is for work, so the way it is actually used and recorded decides the outcome.
Entertainment and minor benefits
The FBT treatment of entertainment depends on who attends, where the event is held and how the cost is recorded. Food and drink provided to employees on a working day on the business premises is generally exempt, while a function held at a restaurant can be a fringe benefit unless the minor benefit exemption applies, which requires the benefit to be under $300 per employee and provided infrequently and irregularly. The income tax deduction and the GST credit follow the FBT treatment, so the classification matters for all three.
What can still be done before 31 March 2027
Several steps only count if they are taken within the FBT year. Before 31 March 2027, a business can:
- start or confirm a logbook for any car that may suit the operating cost method
- arrange employee contributions, which reduce the taxable value of a benefit when they are paid within the year
- put loan agreements on a commercial footing, with interest paid at or above the 8.27 per cent benchmark rate
- check whether each ute and each entertainment arrangement fits an exemption
- record odometer readings for every car on 31 March 2027
Information to gather for the return
An FBT return is prepared from a list of vehicles provided to employees and directors, with their purchase cost and date of acquisition, the logbooks and odometer readings, records of employee contributions and reimbursements, details of entertainment and gifts provided during the year, and the terms of any loans or novated leases. Gathering these during the year makes the return quicker to prepare and leaves time to fix anything that needs it before the year closes.
How we can help
We review the benefits your business provided during the year, confirm which exemptions apply, work out the most suitable valuation method for each car and prepare and lodge the FBT return. For businesses that provide cars or regular entertainment, a review in the first quarter of the calendar year leaves time to act on what it finds. Contact our team to arrange one, or speak with your usual Prime Partners contact.
Related reading
Frequently Asked Questions
What is the FBT rate for 2026-27?
The FBT rate for the year ending 31 March 2027 is 47 per cent. The gross-up rate is 2.0802 for Type 1 benefits and 1.8868 for Type 2 benefits.
When is the 2027 FBT return due?
The return for the year ending 31 March 2027 is due to be lodged and paid by 21 May 2027. Where a tax agent lodges it electronically, the due date is generally 25 June 2027, provided the business is on the agent's FBT client list by 21 May.
What is the statutory formula rate for car FBT?
A flat 20 per cent of the car's base value, regardless of the distance travelled or the split between business and private use.
Are electric cars still exempt from FBT?
Yes. Battery electric and hydrogen fuel cell cars remain exempt where their value at first retail sale was below the luxury car tax threshold for fuel-efficient vehicles, which is $91,661 for cars first sold in 2026-27. The car must also be first held and used on or after 1 July 2022.
Are plug-in hybrids still FBT exempt?
Not for new arrangements. From 1 April 2025 a plug-in hybrid is no longer a zero or low emissions vehicle for FBT purposes, although the exemption can continue for a plug-in hybrid that was exempt before that date under a financially binding commitment entered into before 1 April 2025.
What odometer records do I need for FBT on cars?
Odometer readings at the start and end of each FBT year for every car. Under the operating cost method you also need a valid logbook covering at least 12 continuous weeks.
