Money
Fringe Benefits Tax — what employers won't always tell you
FBT is a tax employers pay on non-cash benefits — cars, gym, novated leases. What that means for you as an employee, where novated EVs sit now, and salary sacrifice into super.
Published 17 May 2026 · Last reviewed 17 May 2026
Fringe Benefits Tax (FBT) is a tax employers pay on non-cash benefits they provide to employees — company cars, gym memberships, novated leases. Most of the time, it's invisible to you (the employee). But:
- Novated lease cars — common employer benefit. A car is leased through your salary, often pre-tax. FBT applies, but for electric vehicles, the FBT exemption can make EVs significantly cheaper. As of May 2026, the EV FBT exemption is being phased back — verify current scope at https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/fringe-benefits-tax
- Living Away From Home Allowance (LAFHA) — paid by some employers when you're posted away from your usual home. Has tax-free components but tight rules.
- Salary sacrifice into super — pre-tax dollars into your super, can reduce your taxable income. Generally a good move if you're earning above the 30% bracket and don't need the cash now.
The three common newcomer mistakes around FBT-relevant benefits:
- Accepting a novated lease without modelling the post-tax cost on your actual marginal rate. The "savings" sometimes look better in the brochure than in your bank account.
- Treating LAFHA as straightforward salary. It has conditions — keep records of your other home.
- Salary-sacrificing more than you can afford to lock up in super until preservation age (currently 60).