If your business provides cars to employees — whether through a fleet, salary packaging, or informal arrangement — you have FBT return 2026 employer car obligations to meet. The 2025–26 FBT year runs from 1 April 2025 to 31 March 2026, and the return is due shortly after.
This guide covers the key dates, car benefit valuation methods, the EV exemption, record-keeping requirements, and common employer mistakes.
Key dates for the 2025–26 FBT year
| Milestone | Date |
|---|---|
| FBT year start | 1 April 2025 |
| FBT year end | 31 March 2026 |
| FBT return due (paper) | 21 May 2026 |
| FBT return due (tax agent) | 25 June 2026 |
| Payment due | 21 May 2026 |
The FBT rate for the 2025–26 year is 47%, comprising the top marginal income tax rate of 45% plus the 2% Medicare levy.
When car FBT applies
FBT applies when an employer makes a car available for an employee’s private use. This includes:
- Company-owned or leased vehicles used by employees outside work hours
- Salary-packaged vehicles under novated lease arrangements
- Pool cars taken home by employees
- Vehicles garaged at an employee’s home, even if rarely used privately
If the car is only used for business purposes and is garaged at the employer’s premises (not the employee’s home), FBT generally does not apply.
Valuation methods for car fringe benefits
Employers can choose between two methods to value car fringe benefits:
Statutory formula method
The taxable value is calculated as:
Base value of the car × 20% × days available for private use ÷ 365
The statutory fraction is a flat 20% regardless of kilometres driven. The base value is generally the cost of the car (including GST and dealer delivery charges, but excluding registration, stamp duty, and insurance).
This method is simpler but may overstate the benefit for vehicles with high business use.
Operating cost method
The taxable value is:
Total operating costs × private-use percentage
Operating costs include fuel, registration, insurance, repairs, servicing, and depreciation. The private-use percentage is determined from a logbook maintained for a minimum 12-week period.
This method requires more record-keeping but typically results in a lower FBT liability when business use is high.
The EV FBT exemption
Eligible battery electric vehicles (BEVs) and hydrogen fuel cell vehicles are exempt from FBT, provided:
- The vehicle was first held and used on or after 1 July 2022
- Its value is below the luxury car tax threshold for fuel-efficient vehicles ($91,387 for 2025–26)
- Luxury car tax was never payable on the vehicle
PHEV change: From 1 April 2025, plug-in hybrid electric vehicles no longer qualify for the exemption unless grandfathered under transitional rules.
Even exempt vehicles must be reported in the FBT return if you would have had an FBT liability but for the exemption. The value is reported as an exempt benefit.
For full details, see our EV FBT exemption guide.
Gross-up rates
When reporting fringe benefits, employers must gross up the taxable value:
- Type 1 (GST credits available): gross-up rate 2.0802
- Type 2 (no GST credits): gross-up rate 1.8868
The grossed-up amount is what appears on the employee’s income statement as a reportable fringe benefit and is used to calculate the FBT payable.
Record-keeping requirements
Employers must maintain:
- Vehicle details — make, model, registration, cost, and date of purchase or lease commencement
- Employee declarations — signed statements regarding private use, if applicable
- Odometer readings — at the start and end of each FBT year (1 April and 31 March)
- Logbooks — if using the operating cost method, a valid 12-week logbook for each vehicle
- Fuel and expense records — for the operating cost method
Accurate kilometre records are critical. Tripbook can track business and private kilometres across your fleet automatically, providing the data needed for either valuation method.
Reportable fringe benefits
If the total grossed-up value of fringe benefits provided to an individual employee exceeds $2,000 in the FBT year, the amount must be reported on the employee’s income statement. This affects the employee’s:
- Medicare levy surcharge liability
- Private health insurance rebate tier
- Eligibility for certain government benefits
- HELP/HECS repayment thresholds
For more on reporting obligations, see our reportable fringe benefits guide.
Common employer mistakes
Not lodging when required. If you provided any car fringe benefits during the year, you must lodge an FBT return — even if the net liability is zero due to employee contributions or the EV exemption.
Using the wrong base value. The statutory formula base value should include GST and delivery charges but exclude on-road costs like registration and CTP insurance.
Forgetting odometer readings. Missing odometer records at 1 April and 31 March undermine the operating cost method and make it difficult to defend the valuation if the ATO queries it.
Not updating logbooks. A logbook is valid for five years, but if driving patterns change significantly (e.g., an employee changes roles), a new logbook should be completed.
Ignoring the PHEV changes. New PHEV arrangements after 31 March 2025 attract full FBT. Ensure your payroll and fleet systems reflect this change.
Key takeaway
Meeting your FBT return 2026 employer car obligations requires accurate records, the right valuation method, and awareness of the EV exemption rules. Tracking kilometres across your fleet with Tripbook simplifies the data collection that underpins both valuation methods.
