From 1 April 2027, there'll be changes to how fringe benefits tax (FBT) applies to some salary sacrificed work-related benefits provided to your employees.
What's changing?
From 1 April 2027, you'll no longer be able to use the otherwise deductible rule to reduce your FBT liability for salary sacrificed work related expense payment fringe benefits that are covered by the standard deduction.
This is regardless of the value and includes reimbursements or payments for work-related expenses, such as:
- home office expenses
- home phone or internet expenses
- self-education expenses.
Certain work-related items will no longer be exempt from FBT when provided through a salary sacrifice arrangement, including:
- portable electronic devices
- computer software
- protective clothing
- briefcases
- tools of trade.
You can provide multiple items with the same function without incurring FBT. You will be able to provide employees with more than one eligible work-related item in an FBT year and continue to receive the exemption, where the items:
- are mainly used for work purposes
- aren't provided through a salary sacrifice arrangement.
This removes the current limit of one exempt item per employee per FBT year and extends the exemption to all employers, not just small businesses.
What's not changing?
You can continue to use the otherwise deductible rule for expense payment fringe benefits that:
- aren't covered by the standard deduction, or
- are covered by the standard deduction but aren't provided under a salary sacrifice arrangement.
Eligible work-related items will remain exempt from FBT when they aren't provided under a salary sacrifice arrangement.
How to prepare
Review the salary sacrificed work-related benefits you provide and which expenses are covered by the standard deduction.
This will help you determine whether the changes affect your NFP and the amount of FBT you need to pay. You should:
- know how to correctly calculate your FBT
- keep the right records
- meet your reporting and lodgment obligations for the 2027-28 FBT year.
Help and support
You can learn more about expense payments fringe benefits taxThis link opens in a new window on our Essentials to strengthen your small business online learning platformThis link opens in a new window. You can also reach out to your registered tax professional to help you meet your FBT obligations.
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