The FBT year ends 31 March 2026. Returns are due 21 May 2026 on paper, or 25 June 2026 if lodged electronically through us.
Every year we get the same question from clients: “We don’t think we’ve got anything to pay – do we even need to lodge?”
The answer has changed. Here’s why 2026 is different, what’s actually moved in the rules, and why lodging – even a nil return – might be the smartest piece of compliance you do this year.
The big picture: the ATO has shifted from “compliance” to “enforcement”
This is the line from the ATO’s own update for the 2026 FBT year, and it’s worth taking at face value.
Three things are driving it:
1. The FBT gap. The ATO estimates the difference between what should be paid in FBT and what’s actually being paid is over $1 billion a year. They’ve made closing that gap a formal priority.
2. Data matching has stepped up hard. The ATO now cross-references:
- State motor vehicle registries (who owns what)
- Single Touch Payroll data (who’s on the books)
- BAS lodgements and GST data
- Income tax returns
- Social media and toll records (yes, really)
If your business has staff, owns vehicles, pays directors, or reimburses expenses – and you’ve never lodged an FBT return – the system now flags that automatically.
3. Non-lodgement has become the biggest risk. Not underpaying. Not getting it wrong. Just failing to lodge at all.
Why lodging a nil return matters more than the tax itself
This is the part most business owners don’t realise.
When you lodge an FBT return (even one showing nothing to pay), the ATO’s amendment window is limited to three years. After three years, they can’t go back and reopen that year unless they can prove fraud or evasion.
When you don’t lodge at all, there is no amendment window. The ATO can review your FBT position back to the day you started the business. No limit. No statute. No protection.
Imagine the ATO knocks on your door in 2028 and asks questions about the FBT you should have paid in 2019. If you lodged, they can’t touch it. If you didn’t, everything’s on the table.
This isn’t theoretical. The ATO’s Random Enquiry Program is already auditing businesses of all sizes to check employment tax obligations, including FBT. If you get picked, the first question is always “when was your last FBT return lodged?”
Lodging a nil return isn’t a box-tick. It’s an audit shield.
But – and this matters – a nil return has to be real. The ATO has specifically said it’s targeting nil returns lodged without proper supporting work. You have to actually assess whether you’ve provided benefits, calculate the value, and confirm the position before you click lodge. A “she’ll be right” nil return without backup is now one of the highest audit risks out there.
That’s why our FBT questionnaires ask the questions they do. It’s not busywork – it’s the evidence trail that backs your lodgement if anyone ever asks.
What actually changed for the 2026 FBT year
The core rate didn’t move – FBT is still 47%. But plenty else did:
1. Plug-in hybrid vehicles lost the EV exemption
This is the big one if you’ve been salary-packaging vehicles.
From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are no longer classed as zero or low-emission vehicles for FBT. Any new PHEV arrangement entered from that date attracts full FBT.
Existing PHEV arrangements can still qualify under transitional (grandfathering) rules, but only if:
- The vehicle was in use before 1 April 2025
- There’s a financially binding commitment to keep providing it
- No material changes have been made to the arrangement
A refinance, a lease extension, or a vehicle swap kills the exemption permanently. We’ve already seen clients accidentally break this by renewing a novated lease without thinking about it.
Battery electric vehicles (BEVs) and hydrogen fuel cell vehicles are still exempt if they’re under the luxury car tax threshold and meet the eligibility rules.
2. Work utes are the ATO’s named compliance priority
The ATO has specifically called out dual-cab utes as a 2026 quarterly priority. If you provide utes to tradies (or you’re a tradie director driving one), the “it’s a work vehicle” exemption isn’t automatic and the rules are tighter than most people think.
We’ve written a full piece on this: [The Dual-Cab Ute FBT Trap →]
3. Benchmark interest rate dropped to 8.62%
If you’ve loaned money to an employee or director at below-market interest (or zero interest), the gap between what you charged and 8.62% is a loan fringe benefit. This is relevant for Division 7A loans, employee advances, and anything that looks like financial accommodation.
For the FBT year starting 1 April 2026, the benchmark drops again to 8.27%.
4. Record-keeping exemption threshold up to $10,664
If your total fringe benefits come in under this amount, you can use simpler calculation methods. Small relief for small providers.
5. Car parking daily threshold up to $11.03
Relevant if you provide car parking to employees and there’s a commercial car park nearby charging more than that per day.
6. Employee contributions by journal entry – ATO is watching
A common technique to reduce FBT is to have the employee “contribute” towards the benefit via a journal entry (rather than actually paying cash). This can be legitimate, but the ATO has flagged concerns, especially where:
- The journal is posted after 31 March
- The employee doesn’t actually legally owe the money
- There’s no corresponding financial obligation the other way
If we’ve done this for you in prior years, expect us to tighten up how we document it this year.
7. The alternative record-keeping rules are bedded in
From 1 April 2024, employers can rely on existing business records instead of the old prescribed declaration forms for several benefit types – travel, vehicles other than cars, relocation accommodation, work-related car travel. For the 2026 year, this is now business-as-usual rather than new.
Who actually needs to worry about FBT?
You probably need to think about FBT if any of these apply:
- You provide a vehicle (car, ute, van) that an employee or director can use privately, or that’s garaged at their home
- You pay for entertainment – client lunches, staff Christmas parties, Friday beers, event tickets
- You reimburse personal expenses – phones, internet, gym memberships, private health insurance
- You provide car parking near a commercial car park
- You’ve loaned money to an employee or director at below-market rates
- You salary-package anything for your team
- You provide living-away-from-home allowances for employees on distant jobs
If you’re a director taking wages through your company and you drive a company ute, that’s you.
What you need to do before 31 March
Time is short once the FBT year ends, so now is when the work happens:
For every vehicle in the business:
- Record the odometer reading at 31 March
- Pull together lease, purchase, running cost information
- Review who drove it, how much privately, and whether any exemption applies
For entertainment:
- Pull meal and event costs out separately from general entertainment
- Flag anything where staff and clients were both present
- Decide whether you’re using the 50/50 method or actual method
For expense reimbursements:
- List what’s been reimbursed to employees that isn’t strictly work
- Phone/internet private-use percentages
- Anything that looks like salary packaging
For directors:
- Check whether your company has made any loans to you during the year that haven’t been repaid
- Division 7A and FBT overlap here, and both matter
Our FBT process
There are two FBT questionnaires below. Pick the one that fits your situation and we’ll take it from there.
You’ve lodged an FBT return before (including past nil returns)
This is the full questionnaire. It covers vehicles, entertainment, reimbursements, loans, and everything else we need to prepare your 2026 FBT return or nil lodgement. If we’ve done FBT for you before, this is the one to complete.
Complete your FBT questionnaire →
You’ve never lodged FBT before
If you’ve got staff and vehicles (or anything else that might trigger FBT) and you’ve never lodged a return, this short questionnaire is designed to get you to a clean nil lodgement and close the audit window. It’s the simplest way to protect yourself from that open-ended ATO review risk.
Start your FBT questionnaire →
Not sure which one, or you want a conversation first
Book a short review and we’ll work out where you stand before you fill anything in.
Once you complete the questionnaire, we run the numbers, identify any exemptions or reductions that apply, and tell you whether you have a liability, a nil return to lodge, or no obligation at all. We lodge the return (or the notice of non-lodgement) before 25 June and give you a record of the decisions we made – so if the ATO ever asks, the answers are already documented.
Bottom line
FBT is one of those taxes that sits quietly until it doesn’t. The ATO has made it very clear that 2026 is the year of enforcement, not reminders. Data matching is doing the work that used to require a human auditor. The $938,000 case study they’re publishing was a Melbourne restaurant that thought they didn’t have an FBT problem.
Whether you have something to pay this year or not, lodging closes the window. Not lodging leaves it open forever.
Let’s make sure your window is closed.
This article is general information only. FBT rules are complex and depend on your specific circumstances. Speak to a registered tax agent for advice that applies to your business.
