FBT on Company Cars, Parking and Entertainment 2025-26
Last reviewed:
Primary tax-year context: 2025-26
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
What is Fringe Benefits Tax?
Fringe Benefits Tax (FBT) is a tax paid by employers on certain non-cash benefits provided to employees (or their associates). Unlike income tax, FBT is paid by the employer, not the employee — though the cost is often factored into total remuneration packages.
The key numbers for the FBT year ending 31 March 2026:
| Item | Rate/Amount |
|---|---|
| FBT rate | 47% |
| Type 1 gross-up rate | 2.0802 (GST claimable) |
| Type 2 gross-up rate | 1.8868 (no GST credit) |
| FBT year | 1 April 2025 – 31 March 2026 |
The FBT rate mirrors the top marginal income tax rate plus the Medicare levy, ensuring that fringe benefits are taxed equivalently to cash salary for top-bracket earners.
Car fringe benefits
A car fringe benefit arises when an employer-owned or leased car is made available for an employee’s private use — including commuting to and from work. There are two methods to calculate the taxable value.
Statutory formula method
The simpler approach. The taxable value is 20% of the car’s base value, regardless of how much private use occurs.
Taxable value = Base value × 20% × (days available ÷ 365)
- Base value is generally the cost price of the car (GST-inclusive), reduced by one-third after four FBT years
- Employee contributions reduce the taxable value dollar for dollar
Operating cost method
Requires a valid logbook maintained for a continuous 12-week period. The taxable value is the private-use percentage of total operating costs.
Taxable value = Total operating costs × Private-use percentage
Operating costs include fuel, registration, insurance, repairs, depreciation and lease payments.
| Method | Best when |
|---|---|
| Statutory formula | High private use or you don’t want logbook hassle |
| Operating cost | Low private use (<20%) and willing to keep a logbook |
Worked example — Car FBT
An employer provides a car with a base value of $60,000 for the full FBT year. No employee contributions.
Statutory method:
- Taxable value: $60,000 × 20% = $12,000
- Grossed-up (Type 1): $12,000 × 2.0802 = $24,962
- FBT payable: $24,962 × 47% = $11,732
The employer pays $11,732 in FBT on this car benefit for the year.
Car parking fringe benefits
A car parking fringe benefit arises when an employer provides parking to an employee on a business day, and the lowest commercial parking rate within a 1km radius of the premises exceeds the threshold.
2025-26 threshold: $10.40 per day
If the cheapest all-day commercial parking near the employer’s premises costs more than $10.40, the parking benefit is subject to FBT. This means car parking FBT primarily affects employers in CBD and high-density areas.
Exemptions
- Employers with a turnover under $10 million in the previous FBT year are exempt from car parking FBT
- Parking at non-commercial premises (e.g., employer’s own rural property) is generally exempt
Entertainment fringe benefits
Entertainment — such as meals, drinks, tickets to events and recreational activities — can trigger FBT when provided to employees. The rules depend on the type and value of the entertainment.
Common entertainment categories
| Type | FBT treatment |
|---|---|
| Meal entertainment (restaurant meals, catered events) | Taxable unless exempt minor benefit |
| Recreation (sporting events, concerts, holidays) | Taxable |
| Minor benefits (under $300, infrequent, irregular) | Exempt |
| Taxi travel to/from work | Exempt |
| Work-related seminars/conferences | Generally exempt (business purpose) |
The minor benefit exemption
Benefits valued at less than $300 that are provided on an infrequent and irregular basis may be exempt under the minor benefit rule. This is why many employers keep Christmas party costs and gifts under this threshold.
Important: The $300 threshold applies per benefit, per employee. You can’t split a $500 benefit into two $250 amounts to claim the exemption.
Electric vehicle FBT exemption
Since 1 July 2022, eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) committed to use before 1 April 2025 are exempt from FBT. This makes salary packaging an EV significantly more attractive.
For full details, see our FBT electric car exemption guide.
Key takeaways
- FBT is paid by the employer at 47% on the grossed-up taxable value of benefits
- Car FBT can be calculated using the statutory formula (20%) or operating cost method — choose based on private-use levels
- Car parking FBT only applies where nearby commercial rates exceed $10.40/day and the employer’s turnover is above $10 million
- Entertainment benefits under $300 may be exempt under the minor benefit rule
- EVs and PHEVs may be fully exempt from FBT, making salary packaging highly tax-effective
Use the FBT calculator to estimate your employer’s FBT liability and see the impact on total remuneration.