FBT 2026: Closing Out the Year and Resetting for 1 April

The FBT year ended on 31 March, 2026, and the new FBT year began on 1 April, 2026.

For employers, this is the point where year-end discipline matters most:

• Finalise the 2026 position
• Make sure the supporting evidence is complete
• Reset the right settings for the year ahead

FBT is self-assessed by the employer, and record-keeping obligations still matter even where no return is required.

For the FBT year ended 31 March, 2026, the key settings are familiar but still important. The FBT rate is 47%. The type 1 gross-up rate is 2.0802 where GST credits are available, and the type 2 gross-up rate is 1.8868 where they are not. Reportable fringe benefits are grossed up using the lower rate, and reporting is triggered where the employee’s reportable fringe benefits have a total taxable value of more than $2,000 for the FBT year.

Other confirmed 2026 parameters also deserve attention.

The car parking threshold for the year ended 31 March, 2026 is $11.03 per day. The benchmark interest rate for loan fringe benefits is 8.62%. The base-year record-keeping exemption threshold is $10,664. These are straight forward numbers, but they often sit behind higher-risk areas such as loan arrangements, salary packaging and parking assessments.

Car parking remains one of the areas where technical precision matters most. The ATO’s current public ruling is TR 2021/2, which replaced TR 96/26. In practical terms, employers should assess parking location by location, including whether there is a commercial parking station within 1 kilometre by the shortest practicable route and whether the relevant all-day fee is above the threshold.

Record keeping should also be separated into the correct regimes.

The $10,664 figure is not a general exemption from maintaining FBT records; it relates only to the base-year exemption arrangement. Separately, from 1 April, 2024, employers have had a choice for certain benefits to rely on existing business records instead of some statutory documents such as travel diaries or employee declarations, but only where the Commissioner has made a determination by legislative instrument.

Timing also matters.

Employee declarations must be obtained by the due date for lodgement of the FBT return, and where no return is required, by 21 May. FBT records must generally be kept for 5 years from lodgement, or from the due date if no return is required.

Electric vehicles and plug-in hybrids continue to need close coordination across payroll, fleet and salary packaging. From 1 April, 2025, a plug-in hybrid electric vehicle is no longer treated as a zero or low emissions vehicle for the electric car exemption unless the relevant grandfathering conditions are satisfied.

There is also an important reset point for the new FBT year. For earlier FBT years beginning on or after 1 April, 2022, the ATO’s EV home-charging shortcut rate was 4.20 cents per kilometre. For the FBT year starting 1 April, 2026, the ATO says the revised shortcut rate is 5.47 cents per kilometre. That is a practical systems update worth making immediately.

From 1 April, 2026, the most effective reset is a practical one:

• Refresh car parking evidence for each site
• Revisit loan fringe benefit calculations
• Confirm reportable fringe benefit settings in payroll
• Make sure EV and PHEV treatment is aligned across salary packaging, finance and fleet processes.

Where alternative record keeping is being used, internal guidance should clearly distinguish between benefits covered by a Commissioner determination and those that still require the approved declaration or travel diary.

A strong FBT process is rarely about a single calculation. It is about current settings, reliable evidence and clear ownership across tax, payroll and operations.

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To discuss your FBT close or settings for the new year,contact the Sovereign Private team.

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Disclaimer

The information contained in this publication is general in nature and does not take into account your personal objectives, financial situation or needs. It is provided for information purposes only and does not constitute financial or taxation advice. Before making any decision, you should consider your specific circumstances and seek appropriate professional advice.

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