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?
| Exemption | What it covers | Key conditions |
|---|---|---|
| Minor benefits | Small, infrequent benefits | Notional taxable value under $300 per benefit, and unreasonable to treat as a fringe benefit |
| Work-related items | Portable electronic devices, software, protective clothing, briefcases, tools of trade | Mainly 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 travel | A single trip that begins or ends at the employee’s place of work, or travel due to sickness or injury | Not limousines |
| Electric cars | Eligible battery electric and hydrogen fuel cell cars, including the cost of charging | First 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 employers | Public benevolent institutions and health promotion charities; public and not-for-profit hospitals and public ambulance services | Exemption 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?
| Item | Year ending 31 March 2027 |
|---|---|
| FBT rate | 47% |
| 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 threshold | Taxable 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.
