Key Highlights

  • The FBT rate is 47% for the year ending 31 March 2027.
  • The relevant car parking threshold is $11.48.
  • The current FBT year ends on 31 March 2027.
  • Venue, timing, attendees, cost per head and gifts affect the FBT assessment.

Fringe benefits tax rarely makes headlines, but the end-of-year party season is when many employers stumble into it. On 11 November the ATO published a fresh reminder asking businesses whether they had considered FBT on staff parties, events and gifts. With the 2026–27 FBT year running until 31 March 2027, the rates and thresholds already set for this year will decide what many celebrations, parking spaces and staff loans ultimately cost.

The core FBT numbers for the year ending 31 March 2027

The ATO's rates and thresholds page, updated on 20 May 2026, sets the FBT rate at 47% for the year ending 31 March 2027. That rate has long been aligned with the top marginal tax rate plus the Medicare levy.

Two gross-up rates convert a benefit's taxable value into the amount on which FBT is calculated. The higher Type 1 rate of 2.0802 applies where the employer can claim a GST Credit for the benefit. The lower Type 2 rate of 1.8868 applies where it cannot.

The statutory benchmark Interest Rate is 8.27%. It matters for low-interest or interest-free loans to employees, and for cars valued under the operating cost method.

The record-keeping exemption threshold is $10,962. Under long-standing rules, eligible employers whose Fringe Benefits fall below this level can use a simplified approach instead of keeping full FBT records every year. Eligibility conditions apply and are set out by the ATO.

Why $11.48 matters for a free staff car park

The car parking threshold for the year is $11.48. In broad terms, parking provided to an employee can become a fringe benefit where, among other conditions, a commercial parking station within one kilometre charges more than the threshold for all-day parking.

That means employers in city centres and busy suburban hubs, where nearby commercial rates comfortably exceed $11.48 a day, may face a Liability on spaces they think of as a simple perk.

Exemptions exist, including for some small businesses that meet specific conditions, and there are several ways to value a car parking benefit. The detail is technical, and many employers rely on an adviser to choose a method.

The threshold is indexed each year, so an arrangement that sat below the line in earlier years can drift above it as commercial parking rates rise.

Hypothetical example: what the gross-up does to a benefit

Hypothetical example: An employer provides a staff member with a benefit that has a taxable value of $1,000, and can claim a GST credit for it.

The Type 1 gross-up turns $1,000 into $2,080.20. FBT at 47% on that amount is $977.69.

If the same $1,000 benefit carried no GST credit, the Type 2 gross-up would produce $1,886.80, and FBT of $886.80.

Now consider a loan. Suppose the employer lends a staff member $50,000 for the whole FBT year at 3% interest. The gap to the 8.27% benchmark is 5.27 percentage points, giving a taxable value of $2,635.

Grossed up at the Type 2 rate, that becomes $4,971.72, and the FBT payable is $2,336.71.

These are simplified illustrations. Real calculations depend on the type of benefit, employee contributions, any reductions or exemptions, and how long the benefit was provided during the year.

Parties, gifts and the ATO's latest checklist

The ATO's 11 November bulletin lists the factors that shape the FBT outcome of end-of-year festivities: location, timing, who attends, the cost per head, and any gifts given.

Those factors reflect long-standing principles. A modest party held on Business premises on a working day is often treated differently from an off-site event at a restaurant, and inviting employees' partners can change the result.

Benefits that are small and provided infrequently may qualify for the minor benefits exemption, which has generally applied to benefits valued under $300 per employee, subject to further tests.

Entertainment costs also interact with income tax deductions and GST credits, so a party that escapes FBT may not be deductible either. The ATO's bulletin is general guidance, and the outcome always depends on each employer's facts.

Electric cars and packaged devices: changes from April

Many salary-packaged electric vehicles currently qualify for an FBT exemption. Tax Reform No. 4, a bill that passed the House on 29 October but is not yet law, would reshape that concession.

According to the Treasurer's second reading speech on 27 October, the 100% FBT discount would continue from 1 April 2027 to 31 March 2029 for EVs valued up to $75,000.

From 1 April 2029, EVs up to the luxury car tax fuel-efficient threshold would instead receive a 25% discount on the 20% statutory formula rate. Existing eligible cars would keep their current treatment.

The government says EVs went from 1 in 50 new car sales to about 1 in 8 in 2025. Until the bill passes the Senate, these changes remain proposed rather than enacted.

Draft ATO guidance points to another shift for salary-packaging arrangements. Draft ruling LCR 2026/D5, issued on 26 August to explain the new $1,000 standard deduction for work expenses, deals with the FBT side too.

It says that for FBT years starting on or after 1 April 2027, the "otherwise deductible" rule is unavailable for salary-packaged covered expenses. As a result, according to the draft, salary-packaged laptops and phones lose the work-related items exemption.

The ruling remains in draft form, and the final version could refine the ATO's view. Employers that offer devices through packaging menus will want to follow it closely.

Key dates to watch

The current FBT year ends on 31 March 2027. FBT returns are generally due in May for employers that lodge themselves, with later dates often available through tax agents.

The Senate Economics Legislation Committee is due to report on 13 November on Labor's trust and housing tax bills. The government has been reported to be targeting Senate passage of its tax package in the third week of November, although that timetable has not been confirmed. Tax Reform No. 4, which carries the EV changes, also still needs Senate approval.

MYEFO, expected in December, could update the costings of the EV and other measures.

From 1 April 2027, the next phase of the EV discount would begin if the bill passes, and the draft ruling's position on packaged devices would apply if it is finalised in its current form. The ATO typically publishes the next year's FBT rates and thresholds ahead of the new FBT year.