As we approach the end of the Fringe Benefits Tax (FBT) year on 31 March 2025, businesses must stay informed about key changes in FBT regulations and trade policies that may impact their operations. From updates on electric vehicle exemptions to the impact of US trade tariffs, here’s a summary of the most critical updates.
FBT Updates for 2025
FBT Exemption for Electric Vehicles (EVs)
Businesses providing employees with eligible zero or low-emission vehicles may qualify for an FBT exemption, provided the vehicle was both first held and used on or after 1 July 2022 and falls under the luxury car tax threshold (set at $89,332 for the 2024-25 financial year).
Important Change: From 1 April 2025, plug-in hybrid vehicles will no longer be eligible for this exemption unless:
- The exemption was already in place before 1 April 2025.
- A financially binding commitment exists to continue providing private use.
Employers should also note that while EVs may be exempt from FBT, associated costs—such as home charging stations—are not covered under the exemption.
Providing Work-From-Home Equipment
With flexible work arrangements still prevalent, businesses often supply work-related equipment like laptops and mobile phones. These remain FBT-exempt as long as they are primarily used for work.
For businesses with a turnover of less than $50 million, multiple similar items (e.g., multiple laptops) can be provided without triggering FBT. However, if employees use equipment for personal purposes, FBT may apply, though this can be reduced based on the business-use percentage.
Are Your Contractors Really Contractors?
Recent High Court rulings and ATO guidelines (TR 2023/4 & PCG 2023/2) have provided stricter criteria for distinguishing between employees and independent contractors. Businesses must ensure:
- A written contract is in place.
- The contract accurately reflects the nature of the relationship.
- Tax, superannuation, and reporting obligations align with the classification.
Failing to classify workers correctly may result in unexpected FBT liabilities, payroll tax obligations, and superannuation costs.
Simplified FBT Record-Keeping Rules
Starting 1 July 2024, businesses will have the flexibility to either:
- Continue using existing FBT record-keeping methods.
- Use standard business records that meet new legislative requirements.
- Combine both methods for ease of compliance.
This update aims to reduce administrative burdens, making it easier for businesses to comply with FBT regulations.
FBT Risk Areas & Common Mistakes
Mismatched Claims for Entertainment: If a business claims a deduction for entertainment expenses but fails to recognise them as a fringe benefit, the ATO may scrutinise the claim.
Employee Contributions via Journal Entries: If businesses use accounting journal entries instead of cash contributions to offset FBT, they must ensure proper documentation to avoid compliance issues.
Not Lodging an FBT Return: Some businesses mistakenly believe they are exempt. If your business provides cars, reimburses personal expenses, or offers employee perks, you likely need to review your FBT obligations.
Trade & Tariff Updates: How Global Policies Impact Australia
1. US Trade Tariffs: Where We Stand
US trade policies continue to shift, with tariffs affecting global supply chains. Key considerations:
The US has maintained tariffs on certain imported goods, impacting Australian exporters.
Industries such as agriculture, steel, and technology could see price fluctuations due to ongoing trade tensions.
2. Will Australia Face US Tariffs?
While no immediate tariffs on Australian goods have been announced, businesses should monitor trade policy changes, particularly regarding export-dependent industries.
3. Foreign Property Purchase Ban
New regulations have restricted foreign property purchases in Australia, potentially impacting the real estate market and foreign investment flows.
Final Thoughts: Staying Ahead of FBT & Trade Policies
With the 31 March 2025 deadline approaching, businesses should review their FBT obligations, contractor agreements, and trade risk exposures. Staying compliant with FBT rules and being aware of global trade policies will help businesses avoid penalties and adapt to economic changes effectively.
Need assistance? Connect with our tax experts to ensure compliance and optimise your tax position.
