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FBT Exemptions 2026-27: Minor Benefits, Work Devices and Costly Mistakes

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FBT Exemptions 2026-27: Minor Benefits, Work Devices and Costly Mistakes

FBT exemptions - employer desk with a staff gift, laptop and calculator

The main FBT exemptions for 2026-27 cover minor benefits under $300, work-related items such as laptops and phones used mainly for work, taxi or ride-sourcing trips that start or end at the workplace, and eligible electric cars. Each one only applies if the benefit meets the ATO’s conditions, not just because it’s cheap or work-related.

The FBT year runs from 1 April to 31 March, so 2026-27 means the year ending 31 March 2027. A big change for work devices is also coming on 1 April 2027 for anything provided through salary sacrifice.

Below are the main exemptions, the current FBT rates, a worked example, the April 2027 change, and the record-keeping mistakes that catch employers out.

Key takeaways

  • The FBT rate is 47% for the year ending 31 March 2027.
  • Minor benefits must have a notional taxable value under $300 and be unreasonable to treat as a fringe benefit.
  • Portable devices, software, protective clothing and tools of trade are exempt when used mainly for work.
  • From 1 April 2027, work-related items provided through salary sacrifice will no longer be exempt.
  • Eligible electric cars first held and used on or after 1 July 2022 are exempt, but the benefit is still reportable.

What are the main FBT exemptions for 2026-27?

ExemptionWhat it coversKey conditions
Minor benefitsSmall, infrequent benefitsNotional taxable value under $300 per benefit, and unreasonable to treat as a fringe benefit
Work-related itemsPortable electronic devices, software, protective clothing, briefcases, tools of tradeMainly for work. One item per employee per FBT year for items with the same function, unless a replacement (small businesses under $50 million turnover are exempt from this limit for portable devices)
Taxi and ride-sourcing travelA single trip that begins or ends at the employee’s place of work, or travel due to sickness or injuryNot limousines
Electric carsEligible battery electric and hydrogen fuel cell cars, including the cost of chargingFirst held and used on or after 1 July 2022, luxury car tax never payable. Plug-in hybrids no longer qualify from 1 April 2025
Not-for-profit employersPublic benevolent institutions and health promotion charities; public and not-for-profit hospitals and public ambulance servicesExemption capped at $30,000 and $17,000 per employee respectively

Sources for these FBT exemptions: the ATO pages on minor benefits, work-related items, taxi and ride-sourcing travel and the electric cars exemption.

What are the FBT rates and thresholds for 2026-27?

ItemYear ending 31 March 2027
FBT rate47%
Type 1 gross-up rate (employer can claim GST credits)2.0802
Type 2 gross-up rate (no GST credits)1.8868
Reportable fringe benefits thresholdTaxable value over $2,000
Car parking threshold$11.48
Record keeping exemption threshold$10,962

These figures come from the ATO FBT rates and thresholds page. The $10,962 figure is the record keeping exemption threshold. It isn’t a tax-free allowance for benefits.

How does the minor benefits exemption work?

Of all the FBT exemptions, this one is the most misunderstood. The ATO’s test has two parts: the notional taxable value must be under $300, and it must be unreasonable to treat the benefit as a fringe benefit. Frequency and regularity matter, so a small benefit given often can fail the test.

  • Occasional: a one-off $120 end-of-year lunch is more likely to qualify. Our guide to Christmas parties and FBT covers the entertainment rules.
  • Recurring: a $50 voucher every month looks like regular pay, even though each one is under $300. See our guide to gift cards and FBT.
  • Connected benefits: for a meal, a night’s accommodation and a taxi, the $300 threshold applies to each benefit separately.

What changes for work devices from 1 April 2027?

The ATO work-related items page says that from 1 April 2027:

  • work-related items provided through a salary sacrifice arrangement, such as portable devices, software, protective clothing and tools of trade, will no longer be exempt from FBT
  • employers will be able to provide more than one exempt item with the same function in the same FBT year, as long as it’s not through salary sacrifice

Watch out

If you offer laptops or phones through salary packaging, review those arrangements before 1 April 2027. Items given directly by the employer for mainly work use can stay exempt.

Worked example: the same laptop, two ways

The facts

A hypothetical Geelong employer that can claim GST credits provides an employee with a $1,500 laptop used mainly for work, in the FBT year starting 1 April 2027.

Option 1: provided directly by the employer

The laptop is a portable electronic device used mainly for work and isn’t provided through salary sacrifice, so it falls within the FBT exemptions for work-related items. FBT payable: $0.

Option 2: provided through salary sacrifice

  • The work-related item exemption no longer applies. Assume a taxable value of $1,500 and no other reduction.
  • Type 1 grossed-up value: $1,500 × 2.0802 = $3,120.30
  • FBT: $3,120.30 × 47% = $1,466.54

For comparison, a $1,000 taxable benefit grossed up at Type 1 is $2,080.20, giving FBT of $977.69. At Type 2 (no GST credit) it’s $1,886.80, giving FBT of $886.80. Our guide to the FBT statutory formula method covers car benefits.

Are electric cars exempt from FBT?

Under the ATO electric cars exemption, an eligible car must be a zero or low emissions car first held and used on or after 1 July 2022, with no luxury car tax ever payable on it. It must be designed to carry a load of less than one tonne and fewer than 9 passengers including the driver.

  • Motorcycles and scooters don’t qualify, even if they’re electric.
  • Plug-in hybrids aren’t eligible from 1 April 2025, apart from limited transitional arrangements.
  • The benefit is still reportable on the employee’s income statement, even though no FBT is payable.
  • For the year ending 31 March 2027, the ATO’s EV home charging rate is 5.47 cents per km.

What records should employers keep?

  • a register of each benefit, the employee, the date and the exemption relied on
  • for devices, evidence of mainly work use and whether an item replaced an earlier one
  • for salary packaging, which items are packaged and which are given directly
  • for electric cars, eligibility documents, odometer readings and charging records

Tip

Set your benefit register up on the FBT year (1 April to 31 March), not the financial year. Our FBT due date guide covers when the return is due.

What FBT exemption mistakes should you avoid?

  • Treating the $300 minor benefits limit as an annual allowance.
  • Assuming every extra device is exempt without checking the one-item rule.
  • Mixing salary-packaged items with direct purchases in the same records.
  • Leaving exempt electric cars out of reportable fringe benefits.
  • Treating the $10,962 record keeping threshold as a tax-free limit.

If you’re reviewing staff benefits and the FBT exemptions you rely on, our salary packaging and payroll services can help you set them up correctly.

FAQ about FBT exemptions

What is the minor benefits exemption limit?

A benefit can be exempt as a minor benefit if its notional taxable value is less than $300 and it would be unreasonable to treat it as a fringe benefit. Frequency and regularity are part of the test.

Are laptops and phones covered by FBT exemptions?

Portable electronic devices such as laptops and phones are exempt when used mainly for work. From 1 April 2027, items provided through salary sacrifice will no longer be exempt.

What is the FBT rate for 2026-27?

The FBT rate is 47% for the FBT year ending 31 March 2027. The Type 1 gross-up rate is 2.0802 and the Type 2 gross-up rate is 1.8868.

Are electric cars exempt from FBT?

Eligible zero or low emissions cars first held and used on or after 1 July 2022, with no luxury car tax payable, are exempt. Plug-in hybrids are not eligible from 1 April 2025, and the benefit is still reportable.

Are taxi trips exempt from FBT?

A taxi or ride-sourcing trip paid for by the employer is exempt if it is a single trip that begins or ends at the employee’s place of work, or if it arises from the employee’s sickness or injury. Limousines are not covered.

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Talk to a registered tax agent

Want your staff benefits checked before the next FBT year? Speak with a registered tax agent at Nanak Accountants & Associates on 1300 626 258, or book a consultation with our team. We provide FBT advice and compliance for employers across Australia.

This article is general information only and is not personal financial or tax advice. Information checked against ATO sources on 8 November 2026.

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Puneet Singh, Founder and Principal Accountant, Nanak Accountants & Associates
Written by

Puneet Singh

Founder & Principal Accountant | Registered Tax Agent
MIPA AFA, ASA (CPA Australia), MBA, MPA, B.Com
12+ Years Industry Experience

Puneet Singh founded Nanak Accountants & Associates in 2020 and has grown it to 25+ staff across eight offices, serving more than 10,000 clients a year. He is a registered tax agent and IPA member who works with small businesses, tradies, property investors and migrant families on tax, business structuring and ATO matters.

Under his leadership, the firm won Excellence in Professional & Business Services at the Wyndham Business Awards 2026.

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