Compliance
Compliance 2025: Fringe Benefits Tax (FBT) Changes Every Employer Should Know
Employers need to adapt to major revisions in FBT law, including changes to plug-in hybrid exemptions, record-keeping rules, and electric vehicle charging guidance.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## Key FBT Changes Coming or Already in Effect
- **Record-keeping reform**: From the FBT year starting 1 April 2024, for certain benefits employers may now use *existing corporate records* instead of travel diaries or employee declarations. These records must meet minimum required information when lodging the FBT return. ([ato.gov.au](https://www.ato.gov.au/forms-and-instructions/fringe-benefits-tax-return-2025-instructions/whats-new-in-fbt?utm_source=openai))
- **Plug-in Hybrid Electric Vehicle (PHEV) exemption ending**: The FBT exemption for PHEVs ends on 31 March 2025. Employers can only continue claiming exemptions if the PHEV was in use or available for private use before that date, and there is a *financially binding commitment* to continue providing private use after that date. ([ato.gov.au](https://www.ato.gov.au/forms-and-instructions/fringe-benefits-tax-return-2025-instructions/whats-new-in-fbt?utm_source=openai))
- **Electric Vehicle Charging Rate (PCG 2024/2)**: Employers and employees with electric vehicles can use a fixed home charging rate (4.2 cents per kilometre) under certain eligibility rules. Also, for reportable fringe benefits, the home charging costs can be included or calculated accordingly. ([ato.gov.au](https://www.ato.gov.au/forms-and-instructions/fringe-benefits-tax-return-2025-instructions/whats-new-in-fbt?utm_source=openai))
## Practical Implications for Employers
- Review all fleet arrangements and introduction or retirement of PHEVs. If you want exemption benefit, ensure you had qualifying use before 1 April 2025 and a binding commitment for continued use.
- Implement new record-keeping processes. Existing invoices, logbooks, service records may suffice if they include what the ATO requires — date, benefit type and usage.
- Update policies around employee vehicle use, reimbursements, and charging costs for EVs. Ensure employees contribute properly if such contributions reduce the fringe benefit taxable value.
## Examples of How to Compute Changes
> *Example:* XYZ Pty Ltd has two PHEVs acquired and available for private use as of 1 March 2025, and commits contractually to provide private use through to end of 2025 FBT year. It may still claim exemption for those vehicles. But any added vehicle acquired after 1 April 2025 won’t qualify.
> *Example:* Employer offers an EV to staff and reimburses home-charging costs. They may use the PCG rate of 4.2c/km if the vehicle and use meet eligibility ‒ simplifies calculation vs tracking actual electricity costs.
## Actionable Checklist for Employers
- Inventory all fringe benefits and map which ones changed.
- Update employee communication about vehicle benefits, declarations and contributions.
- Train accounting and payroll teams on the new rules, especially around calculating taxable values and gross-ups.
- Periodically audit your fleet’s usage vs binding commitments to avoid losing exemption.
Non-compliance under FBT can lead to large liabilities; these rule changes are significant. Employers who prepare early can gain clarity and avoid surprises.