FBT Tax Time 2025-26 - Are you ready?

The 2025-26 fringe benefits tax (FBT) year ended on 31 March 2026. As employers gear up for FBT tax time, there are a few changes for 2025-26 that employers should be aware of, especially if you provide plug-in hybrid electric vehicles (PHEVs) to your employees.

Removal of blanket FBT exemption for PHEVs

From 1 April 2025, PHEVs are no longer considered zero or low emissions vehicles under FBT law, which means that a PHEV may no longer qualify as FBT exempt.

The electric car exemption can, however, continue to apply for PHEVs where certain conditions are satisfied:

• The use, or availability for use, of the plug-in hybrid electric vehicle was exempt before 1 April 2025, and
• There is a financially binding (pre-existing) commitment before 1 April 2025 to continue providing the use, or availability for use, of the car for private purposes on and after 1 April 2025 (any optional extension of the agreement is not considered binding).

Home-charging expenses – shortcut method

Employers with FBT liabilities can sometimes find it challenging to calculate the electricity cost of charging a vehicle at an employee’s home. For the 2025-26 FBT year, the ATO has updated its guidance and provided a shortcut home-charging rate for electric vehicles and PHEVs.

Use of the shortcut rate is optional and requires that certain eligibility criteria be met. If the shortcut rate isn’t available, or you’d prefer to calculate the actual electricity costs used instead, that’s perfectly fine.

ATO’s focus on misreporting

When it comes to vehicles, the ATO has a few FBT focus areas that attract its attention. This includes incorrectly treating the private use of a work vehicle as being for business use, failing to apportion between business and private use, or failing to report personal use of a work vehicle altogether. Keeping adequate records, such as valid logbooks, can help ensure that this problem doesn’t arise.

Remember, FBT can apply even if a work vehicle is made available to someone other than an employee, for example, the employee’s family members or associates.

Ready for FBT tax time?

Need help checking your documents for FBT compliance, or have questions about the changes for plug-in hybrid electric vehicles? Book some time with a member of our team today. We’d be happy to have a chat to discuss your business’s needs.