​FBT Year Has Ended – What You Need to Know If Your Business Owns a Vehicle

As of 31 March 2025, the Fringe Benefits Tax (FBT) year has officially ended. While FBT might not be the most exciting topic, if your business owns a vehicle used by employees, you may be affected—and now is the time to take action.
The Australian Taxation Office (ATO) has significantly increased its focus on FBT compliance this year, particularly when it comes to cars. In fact, the ATO has received an additional $998 million in funding for audits, with high-value vehicles (especially those over $65,000) in the spotlight.

Why Lodging an FBT Return Matters
Here’s what every business owner should know:

• Lodging an FBT return—even if no FBT is payable—limits the audit window to three years.
  • If you don’t lodge, the ATO can audit you at any time in the future.
• Not lodging is an audit trigger. The ATO has confirmed that businesses not lodging FBT returns increase their risk profile.
• There are real consequences. A small business recently received an FBT bill of $13 million, covering the years 2012 to 2023—simply because they had never lodged any FBT returns.

Even if your risk level is much lower, the 47% FBT rate means it’s important to take this seriously.

Does Your Vehicle Qualify for FBT Exemption?
If you’re providing what you believe to be a commercial vehicle, it must meet specific definitions to be exempt from FBT:

• A taxi, panel van, or utility truck designed to carry a load under one tonne, or
• Any other road vehicle designed to carry a load under one tonne (excluding vehicles primarily designed to carry passengers).

Even if your vehicle qualifies under these definitions, exemption only applies if the private use is considered minor and infrequent.
According to the ATO guidelines (active since 2018), this means:

• No more than 800 km of private use per year, and
• No individual private trip exceeding 200 km.

What You Should Do Next
To protect your business and reduce FBT exposure, here’s what we recommend:

1. Have employees complete a "minor and infrequent use" declaration
   You can download a declaration form from our website here:
   👉 Work Horse Vehicle Declaration
2. If private use exceeds the exemption limits, then:
   • Have employees keep a logbook, ideally updated every 1–2 years (not every 5 years, as some mistakenly believe), or
   • Have employees reimburse the business for personal kilometres driven.
3. If your vehicle does not meet the commercial vehicle definition, it’s crucial you reach out. We can help calculate any required employee contributions and lodge an FBT return if necessary.

Our Final Advice
Lodge an FBT return—even if no FBT is payable.
It’s a relatively small cost that could save you thousands and provide peace of mind knowing your audit risk is minimised.
 
If you need help, clarification, or want us to handle this for you—please don’t hesitate to reach out either by email at [email protected] or call us at (08) 9367 4199. We’re here to support you.