--- title: "FBT and Employee Benefits: A Guide for Small Business" description: Understand FBT on electric cars, work devices, staff gifts and meals. Practical employee benefit planning for Australian SMEs, plus the 2027 changes. image: https://42advisory.com.au/hubfs/A_professional_business_advisor.webp --- [Skip to Content](https://42advisory.com.au/42-advisory-blog/tax-effective-benefits-for-business-owners-and-directors#body) [![42\_Advisory\_Logo\_Header](https://42advisory.com.au/hubfs/42_Logo_Header.svg "42_Advisory_Logo_Header")](https://42advisory.com.au/) Toggle Menu - Accounting & Tax Toggle children for Accounting & Tax - [Small Business Accountants](https://42advisory.com.au/services/small-business-accountant-melbourne) - [Personal Tax Returns & Advice](https://42advisory.com.au/services/personal-tax-accountant-melbourne) - [BAS & IAS Lodgement](https://42advisory.com.au/services/bas-ias-accountant-services-melbourne) - [Tax Compliance](https://42advisory.com.au/services/small-business-tax-compliance-melbourne) - [SMSF Accountants](https://42advisory.com.au/services/smsf-accountant-melbourne) - [Property Tax](https://42advisory.com.au/services/property-tax-accounting-melbourne) - [Bookkeeping](https://42advisory.com.au/services/small-business-bookkeeping-melbourne) - [CPA Accountants & Business Advisors](https://42advisory.com.au/services/cpa-accountant-melbourne) - [Local Accountants](https://42advisory.com.au/accountants) - Business Advisory Toggle children for Business Advisory - [Business Advisory & 3-Way Forecasting](https://42advisory.com.au/services/business-advisory-forecasting) - [Tax Planning](https://42advisory.com.au/services/tax-planning-melbourne) - [R&D Tax Incentive Services](https://42advisory.com.au/services/r-and-d-tax-incentive) - [Business Valuation](https://42advisory.com.au/services/business-valuations) - [Buying a Business](https://42advisory.com.au/services/buying-a-business-due-diligence-melbourne) - [Finance Broking Overview](https://42advisory.com.au/finance/) - [Residential Finance](https://42advisory.com.au/finance/residential-finance-services-melbourne) - [Commercial Finance](https://42advisory.com.au/finance/commercial-finance-services) - [Asset Finance](https://42advisory.com.au/finance/asset-finance-solutions) - Industries Toggle children for Industries - [Accounting for Doctors](https://42advisory.com.au/industries/accounting-advisory-for-doctors-dentists-health-practices) - [E-Commerce & Online Retail](https://42advisory.com.au/industries/ecommerce-accountants-melbourne) - [Tech, SaaS & IT](https://42advisory.com.au/industries/tech-saas-accounting) - [MMA, BJJ & Muay Thai Gyms](https://42advisory.com.au/industries/martial-arts-combat-sports-gym-accountants-melbourne-42-advisory) - [Cafés, Restaurants & Retail Stores](https://42advisory.com.au/industries/cafés-restaurants-retail-stores) - [Crypto Tax for Investors & Traders](https://42advisory.com.au/industries/crypto-tax-accounting-for-investors-traders) - [Builders, Contractors & Trades](https://42advisory.com.au/industries/builders-tradies-accountants-melbourne) - [Startup Accounting & Advisory](https://42advisory.com.au/industries/startup-accounting-advisory-services-melbourne) - [Professional Services Firms](https://42advisory.com.au/industries/professional-services) - [Automotive & Mechanical Services](https://42advisory.com.au/industries/automotive-accountants-melbourne) - [About Us](https://42advisory.com.au/about) - [Contact Us](https://42advisory.com.au/contact-us) - [Resources](https://42advisory.com.au/42-advisory-blog) - [(03) 9997 7081](tel:0399977081) [back to blog](https://42advisory.com.au/42-advisory-blog) # FBT and Employee Benefits: A Guide for Small Business Read Time **29 mins** ![Discussion of FBT & Employee Benefits for Small Business](https://42advisory.com.au/hubfs/A_professional_business_advisor.webp) TL;DR Eligible electric cars, work-related devices and occasional staff gifts can be exempt from fringe benefits tax. An FBT exemption is not the same as a tax deduction or a GST credit, and it does not always produce the lowest total cost. From 1 April 2027, salary packaged work-related items lose the exemption, and the electric car concession is set to narrow. The most expensive FBT mistake we see in small business is not a calculation error. It is treating an exemption as a saving. Employee benefits are a legitimate part of a remuneration package, and they help with staff retention. But fringe benefits tax (FBT), income tax and GST are three separate systems. A benefit can escape FBT and still cost your business more than paying cash, because the same exemption that removes the FBT can also remove your deduction and your GST credit. This guide sets out the benefits worth considering for an owner-managed Australian business, the conditions attached to each, and the two changes taking effect from 1 April 2027. Different rules apply to charities and other FBT-exempt employers. FBT rate 47% FBT year ending 31 March 2027 Minor benefit threshold Under $300 Per benefit, per recipient, not an annual allowance Fuel-efficient LCT threshold $91,661 2026-27 financial year Reviewed 19 September 2026 by Sergiy Kucherenko, CPA, Director, 42 Advisory. ## How does FBT work? FBT is paid by the employer, not the employee, on benefits provided to employees or their associates in connection with employment. The FBT year runs from 1 April to 31 March. For the year ending 31 March 2027 the rate is 47%, applied to the grossed-up taxable value of each benefit. The calculation has three steps. Work out the taxable value under the rules for that benefit type, apply the relevant gross-up factor, then apply 47%. Which gross-up factor applies depends on whether your business can claim a GST credit on the benefit. | Category | When it applies | Gross-up | | --- | --- | --- | | Type 1 | Employer is entitled to a GST credit for the benefit | 2.0802 | | Type 2 | Employer is not entitled to a GST credit for the benefit | 1.8868 | A fully taxable Type 2 benefit with a taxable value of $1,000 grosses up to $1,886.80 and attracts $886.80 of FBT. That is the employer's cost before any income tax deduction for the FBT paid. Note what this means: the employee's marginal rate has nothing to do with it. FBT is charged at 47% whether the recipient earns $60,000 or $300,000. Current rates and thresholds are published by the [ATO in its FBT rates and thresholds](https://www.ato.gov.au/tax-rates-and-codes/fringe-benefits-tax-rates-and-thresholds), and the gross-up mechanics sit in [FBTAA 1986 s.5B](https://www.legislation.gov.au/C2004A03280/latest/text). If your business provides any benefits, the FBT return and payment deadlines matter as much as the treatment. We cover them alongside the rest of the compliance calendar in our guide to the [key ATO due dates for BAS, PAYG, FBT and super](https://42advisory.com.au/42-advisory-blog/key-ato-due-dates-bas-payg-fbt-super-tpar). ## Can business owners and directors receive employee benefits? Any business with staff can provide employee benefits, including a sole trader or a partnership. The limit is narrower than it is often described: a sole trader cannot be their own employee, and a partner is not an employee of their own partnership. Directors of a company can receive employment-related benefits, but directorship alone does not settle the treatment. This distinction is worth being precise about, because it is commonly stated the wrong way round. The question is never simply "what structure do I have". It is who the employer is, and in what capacity the recipient is receiving the benefit. | Arrangement | Practical treatment | | --- | --- | | Sole trader | Can provide benefits to employees. Cannot be their own employee, so drawings are not employee remuneration. | | Partnership | Can provide benefits to its employees. Partners are not employees of their own partnership for this purpose. | | Company | Can provide employment-related benefits to staff and to qualifying directors. Share ownership by itself proves nothing either way. | | Trust carrying on business | Identify the trustee as employer and the recipient's capacity. Being a beneficiary does not make someone an employee. | For a working director, look at the entitlement to remuneration and the connection to employment, not the job title. Paying no salary does not put a director outside FBT. FBTAA 1986 s.137 deems a benefit that would have been salary or wages if paid in cash to be salary or wages, for the purpose of deciding whether someone is an employee at all. A director who takes no wage but drives a company car can still be in the system. Where a trust runs the business, the employing entity is the trustee, and the capacity question matters more than usual. We set out how the roles separate in our explainer on [how trusts work in Australia](https://42advisory.com.au/42-advisory-blog/trusts-in-australia-how-they-work). ### Private expenses are a Division 7A question, not an FBT one Where a company pays a private expense for a shareholder or an associate rather than for an employee, the issue usually moves to Division 7A. Payments and loans can be treated as unfranked dividends unless an exclusion applies or the loan is put on complying terms. See ITAA 1936 ss.109C, 109D and 109N. A journal entry after year end does not decide the outcome, and the two systems do not overlap tidily. Our view is that the remuneration model should be documented before benefits start: which entity employs each person, what they are entitled to, and which benefits form part of their package. That is groundwork, and it is cheaper than a reconstruction. It is one of the first things we look at in a [tax planning engagement](https://42advisory.com.au/services/tax-planning-melbourne), and it sits alongside the payroll and reporting systems covered in our [small business accounting and advisory service](https://42advisory.com.au/services/small-business-accountant-melbourne). ## Which employee benefits should an SME consider first? Start with a genuine business or remuneration need, then test eligibility, reporting and total cost in that order. A benefit nobody values is not a saving, whatever its FBT treatment. | Benefit | Potential advantage | Question to resolve | | --- | --- | --- | | Laptop, phone or tools | Specific FBT exemption may apply | Is it mainly for work, and how is it provided? | | Eligible electric car | Private use can be exempt | Does the car and the arrangement meet every condition? | | Occasional staff gift | Minor benefits exemption may apply | Under $300, and is exemption reasonable here? | | Refreshments or a staff function | Depends heavily on the facts | Is it entertainment, who attends, which method? | ## Are laptops, phones and work tools exempt from FBT? Eligible work-related items can be exempt from FBT when provided mainly for use in the employee's employment. They include portable electronic devices, computer software, protective clothing, briefcases and tools of trade. From 1 April 2027 the exemption no longer applies to items provided under a salary packaging arrangement. The exemption sits in FBTAA 1986 s.58X. The test is the item's main use, not a general connection with the business, so a phone bought for the business and used mostly for private calls does not qualify. Keep the invoice and a short note of the intended work use. For benefits provided up to 31 March 2027, the exemption is generally limited to one item per employee per FBT year where items have the same or a substantially identical function. Two exceptions apply: a genuine replacement item, and portable electronic devices provided by a small business with aggregated turnover under $50 million. The ATO sets out the eligible categories on its [work-related items exempt from FBT](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/exemptions-concessions-and-other-ways-to-reduce-fbt/work-related-items-exempt-from-fbt) page. ### What changes on 1 April 2027 These changes are law, not a proposal. They were enacted by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, and they apply to FBT years beginning on or after 1 April 2027. - Eligible work-related items provided through a salary sacrifice arrangement stop being exempt. Direct provision by the employer can still qualify. - The one-item restriction on substantially identical items is removed for items that are not salary sacrificed, for all employers rather than only small businesses. - The otherwise deductible rule can no longer reduce FBT on work-related expense payment benefits that are covered by the standard deduction and provided through salary sacrifice. The practical effect runs in both directions. Employers who buy the equipment outright gain flexibility. Employers running a packaging policy for devices, home office costs or self-education need to review it well before the date. The ATO summarises the measure in its notice on [FBT changes for salary sacrificed work-related benefits](https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/tax-professionals-newsroom/fbt-changes-for-salary-sacrificed-work-related-benefits), and the amending Act is on the [Federal Register of Legislation](https://www.legislation.gov.au/C2026A00049/latest/text). ## When is an electric car exempt from FBT? An eligible battery electric or hydrogen fuel cell car can be provided for private use without FBT where every condition is met: the vehicle meets the tax definition of a car, the benefit relates to a current employee, the car was first held and used on or after 1 July 2022, and no luxury car tax has ever become payable on it. The conditions in FBTAA 1986 s.8A are cumulative, and the luxury car tax condition is the one that catches people out. It asks whether LCT has ever become payable on a supply or importation of that particular car, not whether the car is worth less than the threshold now. A three-year-old import that attracted LCT when new stays disqualified no matter how far the resale price has fallen. So a second-hand electric car needs a history check, not a price check. Ask for evidence of when it was first held and used, and whether LCT was paid. Compare the car's value against the threshold for the year it was first supplied, not the current year. | Financial year | LCT threshold, fuel-efficient vehicles | | --- | --- | | 2026-27 | $91,661 | | 2025-26 | $91,387 | Source: ATO, [luxury car tax rate and thresholds](https://www.ato.gov.au/tax-rates-and-codes/luxury-car-tax-rate-and-thresholds). Thresholds are indexed each year, so always check the year that applies to the car. The exemption can cover an employer-owned car or a qualifying novated lease, and it extends to associated car expenses such as registration, insurance, repairs and the electricity used to charge the car. A home charging unit is a separate benefit and needs its own assessment. The ATO's [electric cars exemption](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls/electric-cars-exemption) guidance covers the detail. Where the car is financed rather than leased, the funding decision deserves its own analysis: we work through those alongside [asset finance options](https://42advisory.com.au/finance/asset-finance-solutions). ### Plug-in hybrids and reportable benefits Plug-in hybrids generally stopped qualifying from 1 April 2025. Transitional protection requires an exempt car benefit before that date plus a financially binding commitment to continued private use that was already in place. Ordering a car before the deadline is not enough on its own, and a later variation to the arrangement can break the protection. An exempt electric car still creates a reportable fringe benefits amount. That is easy to miss, because no FBT is payable and the amount is not salary. It can still affect HELP repayments, the Medicare levy surcharge and income-tested entitlements for the employee, so the employer must work out the notional taxable value and meet its [reportable fringe benefits](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/fbt-registration-lodgment-payment-and-reporting/reportable-fringe-benefits) obligations under FBTAA 1986 s.135P. Our article on the [Medicare levy surcharge](https://42advisory.com.au/42-advisory-blog/medicare-levy-surcharge-the-tax-that-buys-you-nothing) explains how that flows through to the employee's own return. ### The announced changes from 2027 The 2026-27 Federal Budget announced a staged narrowing of the electric car exemption. On the announced settings, from 1 April 2027 a new arrangement for an electric car valued above $75,000 and up to the fuel-efficient LCT threshold would receive a 25% discount on the FBT otherwise payable rather than a full exemption, with cars at or above the threshold getting no concession. From 1 April 2029, all qualifying new arrangements up to that threshold would receive the 25% discount, and the full exemption would end. Existing arrangements are intended to be protected. We flag this as an announcement, not law. The ATO states plainly that the measure is not yet law on its page covering the [electric car discount and future FBT treatment](https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/electric-car-discount-more-sustainable-fbt-treatment-of-electric-cars). The grandfathering detail, how variations and extensions are treated, and the position for arrangements that are not leases all wait on the implementing legislation. Do not commit to a five-year arrangement on the strength of a Budget paper. Whichever settings apply, compare the finance charges, administration fees, residual payment and reporting consequences before signing. A concession reduces a cost. It does not make a purchase worthwhile. ### Considering an electric car or a change to director remuneration? We will assess the proposed arrangement against the current conditions, set out the reporting obligations, and compare its after-tax cost with the alternatives before you commit. Read our guide to the [EV FBT exemption for business owners](https://42advisory.com.au/42-advisory-blog/electric-vehicle-fbt-exemption-for-small-business-owners-in-melbourne) for more detail on eligibility and reporting. [Talk to us about the arrangement](https://42advisory.com.au/contact-us) ## Are staff gifts under $300 exempt from FBT? The minor benefits exemption can apply where a benefit's notional taxable value is less than $300, generally including GST, and it would be unreasonable to treat it as a fringe benefit. It is tested for each benefit provided to each recipient. It is not an annual allowance, and a benefit of exactly $300 fails the value test. There are two limbs, and the value limb is the easy one. The reasonableness test in FBTAA 1986 s.58P looks at how often similar benefits are provided, the total value of associated benefits, how hard the benefit would be to value and record, and the circumstances in which it was given. The ATO's view on applying it is set out in TR 2007/12. In practice: a $150 hamper at Christmas usually qualifies. A $150 gift card handed to the same employee every month usually does not, because the frequency and the total tell you it is remuneration. Benefits provided under a salary sacrifice arrangement generally cannot use this exemption at all. The ATO's [minor benefits exemption](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/exemptions-concessions-and-other-ways-to-reduce-fbt/minor-benefits-exemption) guidance covers the tests. ## How should businesses treat staff meals and entertainment? First decide whether the food or drink is entertainment, which depends on what is provided, where, when and why. Then identify the recipients and choose a valuation method: the actual method, the 50/50 split, or a 12-week register. The method changes which exemptions you can use, so compare the annual outcome before electing. Sandwiches at a Tuesday planning meeting and a Friday night at a restaurant are not the same benefit, even at the same cost per head. Once you have classified the food and drink, the valuation method does most of the work. | Method | How it works | Trade-off | | --- | --- | --- | | Actual | Identifies the benefits actually provided to employees and associates | Exemptions can be tested against real benefits, but you need recipient records | | 50/50 split | Takes 50% of total meal entertainment spend, including spend on clients | Simple, but the minor benefit and on-premises exemptions cannot reduce the calculation | | 12-week register | Applies a percentage worked out from a representative 12-week register | Useful at scale, but needs a valid election and a compliant register | For a business holding a handful of events a year, the actual method is often the better choice, because it lets the minor benefits exemption do its work. It is not automatically the cheapest, and the 50/50 split can win where client entertainment is a large share of the spend. Run both before you elect. Note also that neither the 50/50 split nor the 12-week register can be used where the entertainment is provided under a salary packaging arrangement. The ATO explains the mechanics at [calculating the taxable value of entertainment-related benefits](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/entertainment-related-fringe-benefits/calculating-the-taxable-value-of-entertainment-related-benefits), and the rules sit in FBTAA 1986 Div 9A, including s.37BA for the 50/50 split. Separately, food and drink provided to and consumed by a current employee on a working day on your business premises can be an exempt property benefit under FBTAA 1986 s.41. That exemption does not automatically extend to a spouse or other associate who comes along, and it does not apply to salary packaged meals. ### No FBT does not mean a deduction This is where the exemption can cost you money. Entertainment that is exempt from FBT is generally not deductible for income tax, and generally carries no GST credit. A non-entertainment gift has a different outcome entirely. Take two ways of spending the same $250 per person on a team of ten. | $2,500 spent on | FBT | After-tax cost | | --- | --- | --- | | Gift hampers, not entertainment | Nil, minor benefits exemption | $1,704.55 | | Restaurant celebration | Nil, minor benefits exemption | $2,500.00 | The working, on the assumptions that the employer is a GST-registered base rate entity taxed at 25%, the actual method is used, GST is charged on both supplies, and the minor benefits exemption applies to each benefit: 1. **Hampers.** $2,500 including GST. GST credit of $227.27, leaving $2,272.73. That amount is deductible, saving $568.18 in tax at 25%. Net cost $1,704.55. 2. **Restaurant.** $2,500 including GST. The entertainment is exempt from FBT, so no deduction is available under ITAA 1997 s.32-5 and no GST credit is available under GST Act 1999 s.69-5. Net cost $2,500. Identical FBT outcome. A difference of $795.45, which makes the dinner close to half again as expensive for the same headline spend. The point is not that dinners are a mistake, because a team dinner may be exactly what the staff want. The point is that an FBT exemption is not a measure of cost, and the three systems have to be run together. Relevant provisions include ITAA 1997 ss.8-1, 32-5 and 32-20, and GST Act 1999 s.69-5. ## What about credit card and frequent flyer rewards? Reward points are not a tax planning strategy, and we would not build a remuneration package around them. The ATO's administrative approach to ordinary consumer loyalty programs does not carry across to points provided as remuneration, or to arrangements designed to convert business spending into private rewards. The relevant guidance is TR 1999/6 on flight rewards and PS LA 2004/4 (GA) on consumer loyalty programs. What matters is who holds the membership, how the points arise, and who redeems them. A short written policy covering business card use, expense reimbursement and private redemption is enough for most small businesses, and it removes the argument later. ### An arrangement we were asked to review A Melbourne e-commerce retailer came to us with a points strategy already running. The business was paying its BAS and GST liabilities through a third-party payment platform rather than direct debit, which attracted a card surcharge but earned airline points on every lodgement. Those points sat in the directors' personal frequent flyer accounts, and were being redeemed for family holidays and cabin upgrades. Separately, the business had packaged an electric vehicle purchase. The EV side was defensible on the facts. The points side needed work, and not primarily for tax reasons. Start with the arithmetic: a surcharge paid on every tax liability is a real, immediate cost, and the points are worth whatever the airline decides they are worth on the day of redemption. Run that calculation before the tax question, because in this case the surcharge exceeded any sensible valuation of the points earned. Then the tax questions, and there were three. Whether points earned on business-funded expenditure and redeemed privately by a director are being received in connection with employment or as a shareholder, which pulls in either FBT or Division 7A. Whether the surcharge is deductible when the purpose of incurring it is a private reward rather than a business one. And whether the arrangement, taken as a whole, is the kind of contrivance the ATO's guidance carves out from its general position on consumer loyalty programs. None of those three questions has a comfortable answer when the membership is personal and the spending is the company's. Our recommendation was to pay tax liabilities by direct debit, hold any business card and its membership in the company's name, and keep redemptions inside the business. The directors kept a benefit worth having, an exempt electric car, and dropped one that was costing them money to create a tax exposure. That trade is available to most businesses running the same arrangement, and it is a common finding in [e-commerce accounting](https://42advisory.com.au/industries/ecommerce-accountants-melbourne) work where payment platforms are already part of the stack. ## What should an employee benefits review cover? In our experience with owner-managed businesses, benefits go wrong for administrative reasons far more often than technical ones. The exemption was available; the agreement was signed after the salary was earned, or nobody worked out the reportable amount. A useful review covers six things. - Confirm the employer and the capacity in which each recipient receives benefits. - Keep only the benefits that meet a genuine business or remuneration objective. - Test each exemption against its conditions, including the changes from 1 April 2027. - Compare total cost: FBT, income tax, GST, finance and administration. - Document any salary sacrifice agreement before the relevant salary is earned. - Check records and benefit reporting before 31 March each year. That fifth point is the one that costs money. A salary sacrifice arrangement has to be agreed prospectively; it cannot relabel remuneration the employee has already earned. The ATO's view is in TR 2001/10 and its [salary sacrificing](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/salary-sacrificing) guidance. Getting the payroll records to match the agreement is ordinary [bookkeeping and payroll work](https://42advisory.com.au/services/small-business-bookkeeping-melbourne), and it is what an FBT review actually relies on. Benefits are also a retention question, not only a tax one. Where a business is competing for staff, the cost of the package belongs in the forecast next to headcount, which is where our [business advisory and 3-way forecasting](https://42advisory.com.au/services/business-advisory-forecasting) work tends to land. Sector matters too: a [professional services firm](https://42advisory.com.au/industries/professional-services) weighing devices and parking has a different problem from a business fitting out utes. One caution on structure. Restructuring purely to reach an FBT concession rarely pays for itself once stamp duty, CGT, ASIC and ongoing compliance costs are counted. Moving an invoice between entities in the same group does not change who the employer is, and it does not change the tax outcome. ## Key takeaways | Do this | Because | | --- | --- | | Name the employer and the recipient's capacity in writing | Structure alone does not decide the treatment, and s.137 can bring a director in with no cash salary | | Review any device or expense packaging policy before 1 April 2027 | Salary sacrificed work-related items lose the s.58X exemption on that date, and this is already law | | Check a used electric car's LCT history, not its current price | LCT that became payable earlier disqualifies the car permanently | | Work out reportable amounts even on exempt benefits | Exempt electric car benefits still hit HELP, the Medicare levy surcharge and income tests | | Price the deduction and GST credit, not just the FBT | Exempt entertainment is generally non-deductible with no GST credit, as the worked example shows | ### Review your benefits before 31 March Book an initial meeting with a CPA to work through your current benefits, the reporting you owe, and what the 2027 changes mean for any packaging arrangement you have in place. [Book an initial meeting](https://42advisory.com.au/meetings/42advisory/initial-meeting-online) **Disclaimer:** The information provided in this article is general in nature and does not constitute specific tax, legal, or financial advice. The outcome depends on the facts, the applicable law and the terms of the arrangement. We recommend seeking professional advice tailored to your individual circumstances before implementation. 42 Advisory is a CPA firm and Registered Tax Agent. ## Frequently asked questions ### Who pays FBT, the employer or the employee? The employer pays FBT. It is calculated on the grossed-up taxable value of benefits provided to employees or their associates, at 47% for the FBT year ending 31 March 2027. The employee's marginal tax rate does not change the employer's FBT rate, although reportable benefits can affect the employee's own income tests. ### Can a sole trader claim FBT exempt benefits for themselves? No. A sole trader cannot be their own employee, so benefits taken for personal use are not employee benefits and the FBT exemptions do not apply to them. A sole trader can still provide benefits to genuine employees. The same distinction applies to a partner in a partnership. ### Is a second-hand electric car eligible for the FBT exemption? It can be, if the car was first held and used by anyone on or after 1 July 2022 and luxury car tax has never become payable on a supply or importation of that car. A lower resale price does not reverse LCT that became payable earlier, so ask for the vehicle's history before relying on the exemption. ### Is the $300 minor benefits threshold an annual limit per employee? No. It is tested for each benefit provided to each recipient, and the notional taxable value must be less than $300, generally including GST. A benefit of exactly $300 fails. Value alone is not enough either: it must also be unreasonable to treat the benefit as a fringe benefit, taking account of how often similar benefits are given. ### Will salary packaging a laptop still be FBT free after 1 April 2027? No. From 1 April 2027, eligible work-related items provided under a salary sacrifice arrangement no longer qualify for the exemption in FBTAA 1986 s.58X. Providing the equipment directly can still qualify where the conditions are met, and the one-item restriction on substantially identical items is removed for items that are not salary sacrificed. ## Need Help Structuring Tax-Effective Benefits? [Review Your Business Remuneration Structure](https://42advisory.com.au/contact-us) ![](https://42advisory.com.au/hubfs/sergiy-kucherenko-cpa-director-42-advisory.jpg) [mailto:skucherenko@42advisory.com.au](mailto:skucherenko@42advisory.com.au) ##### Sergiy Kucherenko Sergiy Kucherenko is the founder and director of 42 Advisory and a member of CPA Australia. He has spent his career in public practice, working with business owners on tax, structuring and the practical problems that come with running a growing company. Before accounting, Sergiy trained as an engineer and studied computer science. The habit of building systems stuck. It is why the practice runs cloud-first and heavily automated, with Xero at the centre rather than paper files, and why he is comfortable acting for clients whose businesses are technical, software companies in particular. His client work covers medical technology, telecommunications, SaaS, construction and trades, and healthcare, including general practice and dental groups. Some clients come to him at incorporation; others when they are restructuring, acquiring or preparing to sell. The areas he knows best are service trust arrangements for medical practices, revenue recognition for SaaS businesses, and cash flow management in construction. 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