Why FBT matters for your franchise
Providing perks is a great way to attract, reward and retain staff - but it comes with responsibilities for franchisees that employ staff. If you choose to provide fringe benefits, you need to ensure you understand and meet your obligations.
Doing so keeps things fair for everyone, ensures your employees can meet their tax obligations and protects your franchise from unexpected liabilities.
Ignoring your FBT obligations or reporting incorrectly can lead to reviews or audits - which can take valuable time away from running your business, and in some cases lead to significant and avoidable penalties.
How to avoid mistakes and stay compliant
We’re here to help employers get it right the first time and support those who need help to get back on track. I’d like to share some practical advice that can help you get your FBT reporting right:- Understand what a fringe benefit is – taking time to understand what a fringe benefit is can help you meet your obligations confidently. As I’ve mentioned previously, fringe benefits come in many forms – from cars to reimbursed personal expenses, or even small perks that may seem minor but can still attract FBT.
- Set reminders for key dates - lodging or paying late can lead to interest charges or penalties, so stay on top of your due dates.
- Practice good record keeping – it’s essential to making sure everything runs smoothly whether you lodge yourself, or through a tax professional. Make a habit of keeping the right records throughout the year and don’t leave it to the last minute. Keep records like receipts, invoices, logbooks, odometer readings and calculations as you go. Good records make reporting easier and ensures you have the right evidence in case it’s required later.
- Make sure you’re claiming exemptions correctly – if you’re claiming an exemption, you must ensure that you meet the relevant conditions and have the appropriate records to support your claim. Not doing so can lead to consequences.
- Don’t lodge a nil return unless you’ve checked properly – if you’re lodging a nil return, take time beforehand to check whether you’ve provided fringe benefits, correctly calculated their taxable value and have the right records. Don’t lodge a nil return and assume you can work out the details later, as it can create issues further down the track.
Getting your FBT right from the start saves time, helps to avoid errors and unnecessary stress later.
4 key steps to FBT success
To help you put this into practice, I’d like to share 4 key steps that every franchisee can take to get your FBT right and meet your obligations with confidence.
(1) Identify the type of fringe benefits you’re providing
Take time to check the employee perks you’ve provided and work out if they’re considered as fringe benefits. This step is essential, as it helps you understand what records you need to keep, whether any exemptions apply and which calculation methods you can use to work out the taxable value of the benefit.
(2) Work out your FBT liability
Once you know what benefits you’ve provided, the next step is to work out their taxable value and your total fringe benefits amount, so that you can determine your FBT liability. Your registered tax professional can help you with this or you can use the helpful tools and calculators on the ATO website.
(3) Keep accurate records
The records you need to keep depend on the fringe benefit you’re providing and the method you used to work out the taxable value. Make sure have the right records to support your FBT position and any exemptions or concessions you claim.
(4) Lodge, pay and report
If you lodge your own return, or use a registered tax professional who lodges by paper, you must lodge your FBT return and pay the amount owed by 21 May 2026.
If your registered tax professional lodges electronically on your behalf, you have until 25 June 2026. However, make sure that you’re listed on your agent’s FBT client list by 21 May to be eligible for the concessional due date.
If you don’t have an FBT liability for the year and you’re registered for FBT, you should submit a completed notice of non-lodgment so you aren’t followed up for a FBT return later.
Don’t forget you need to report the reportable fringe benefits amount on your employees’ income information through Single Touch Payroll or on their payment summary by 14 July 2026.
Information about plug-in hybrid vehicles (PHEVs)
If your franchise provides PHEVs to employees, their family members or associates — and the vehicle is available for personal use, here are some things to keep in mind:
- PHEVs are no longer exempt from FBT - since 1 April 2025, PHEVs no longer qualify for the FBT exemption, unless certain limited requirements are met. You can find out what these are on our website at ato.gov.au/EVexemption.
- New shortcut home charging method - we’ve updated guidance to include a simpler method to help you work out electricity costs when employees charge a PHEV at home. If you meet the eligibility requirements, you can use this method - or you can continue to use the actual electricity costs instead. Find the current home charging rate at ato.gov.au/EVhomecharging.
Get help and support
We know running a franchise keeps you busy – so we want to help you get things right the first time and make it easier to access the support you need.
If you’ve made a mistake with your FBT return, don’t worry – you can amend it.
If you’re experiencing difficulties that make it hard to meet your obligations, contact the ATO before the due date or speak to your registered tax professional. They can help you and guide you through what to do next.
Seeking advice early can save you time, minimize risk and help to ensure that you stay compliant.
The ATO website has a wide range of information, tools and resources to guide you through your FBT obligations. You can also access our free small business online learning hub at smallbusiness.taxsuperandyou.gov.au, where you’ll find self-paced courses designed to build your FBT knowledge.
To stay across the latest tax and super news that may affect your franchise, subscribe to the ATO’s newsletters and follow the ATO on social media to keep informed.
To learn more, visit ato.gov.au/FBT.
Wishing you a smooth and successful FBT tax time!
Peta Lonergan is the Assistant Commissioner for Risk and Strategy Employer Obligations at the Australian Taxation Office (ATO). She is committed to helping small businesses understand their FBT obligations and stay compliant. Peta believes that getting it right from the start is the key, which is why she’s passionate about educating and supporting employers to meet their obligations.
Running a franchise means wearing many hats – and that includes keeping up with obligations like fringe benefits tax (FBT). To help make things easier, I want to share some key information your franchise needs to know – so you can get it right from the start, avoid mistakes and stay compliant.
We’re well into FBT tax time now, so if your franchise provides perks or benefits to staff, it’s important to understand your obligations and what you need to do to meet them.
Before we go any further, remember that FBT is a tax that employers pay on fringe benefits provided to employees. You may be providing fringe benefits, in addition to your employees’ regular wage or salary without realizing it. Here are some common examples:
- a work car that’s available for personal use (including keeping it at an employee’s home)
- food and drink
- tickets to events or shows
- gym or health memberships
- recreational and social activities
- reimbursing an expense incurred by employees (like internet or self-education costs)
- physical gifts for personal use (such as electronics).
If you’ve provided benefits like these to your employees, their families or associates during the FBT year (1 April 2025 – 31 March 2026), you may need to lodge an FBT return and pay the amount owing.
You can find an overview of how FBT works at ato.gov.au/howFBTworks.
