FBT Archives - DLK Advisory

2026 – 27 Federal Budget Update

Admin 15th May, 2026

The 2026 – 27 Federal Budget introduces a range of significant tax and policy measures impacting individuals, property investors, and private groups. The reforms are set against a backdrop of persistent cost of living pressures, elevated interest rates, global uncertainty, and a continued focus on fiscal sustainability.

Many measures are proposed to apply from 1 July 2027 or later and remain subject to consultation and legislative refinement. As such, further detail will be critical in assessing their full impact.

Key Tax Measures

Capital Gains Tax (CGT) Reform

From 1 July 2027, the Government proposes to:

Replace the existing 50% CGT discount with an inflation-based indexation method
Introduce a 30% minimum tax on net capital gains

Practical implications:

Taxpayers may need to obtain market valuations of assets as at 1 July 2027
Existing accrued gains up to that date are expected to retain current CGT treatment under transitional rules
Investment strategies and asset allocation decisions may require reassessment
The application of the minimum tax to superannuation funds and managed investment vehicles remains unclear

Overall, these changes represent a fundamental shift in the taxation of capital and may reduce the attractiveness of long-term passive investment strategies relative to other asset classes.

Negative Gearing – Residential Property

From 1 July 2027, negative gearing concessions for residential property will be limited.

Losses on established residential properties will be ring-fenced
These losses can only be offset against:
- Rental income, or
- Future capital gains from residential property
Losses will no longer offset salary or business income
Grandfathering applies to existing holdings (including contracts entered prior to Budget night)
Exclusions include:

- New residential developments
- Superannuation funds (including SMSFs)
- Widely held trusts and build-to-rent projects
- Certain government-supported housing investments

This measure is expected to influence investor behaviour, gearing strategies, and ownership structures, particularly in the residential property market.

Minimum Tax on Discretionary Trusts

From 1 July 2028, a 30% minimum tax is proposed on discretionary trust income.

Tax will apply at the trustee level, with beneficiaries generally receiving tax credits
Aimed at limiting income splitting and the use of bucket company structures
Exclusions include:
Fixed and widely held trusts
Complying superannuation funds
Deceased estates and charitable trusts
Special disability trusts

These changes are expected to significantly impact family groups and may necessitate review or restructuring of existing trust arrangements, subject to the availability of anticipated transitional relief.

Business Tax Measures

Several measures are aimed at supporting business cashflow and investment:

Loss carry-back
Companies (turnover under $1 billion) can offset current losses against profits from the previous two years (from 1 July 2026), subject to franking constraints
Instant asset write-off
The $20,000 threshold will become permanent from 1 July 2026 for businesses with turnover up to $10 million
Start-up support
Early-stage businesses may access refundable tax offsets for losses in initial years (from 1 July 2028, subject to limits)

These measures provide targeted relief, particularly for SMEs and growing businesses.

Research & Development (R&D) Tax Incentive

From 1 July 2028, the R&D incentive will be re-focused:

Increased support for core R&D activities
Reduced benefits for supporting (non-core) expenditure
Introduction of tighter thresholds and limitations on refundability

Businesses undertaking R&D should review project eligibility, expenditure categorisation, and expected cashflow impacts.

Venture Capital and Investment Incentives

Increased thresholds under VCLP and ESVCLP regimes to support larger investments
Measures aimed at encouraging innovation and growth-stage funding

These changes may enhance access to capital for emerging businesses.

Personal Tax Measures

Working Australians Tax Offset (WATO)
$250 annual offset from 1 July 2027
Standard deduction for work-related expenses
$1,000 deduction from the 2026–27 income year without substantiation
Personal income tax cuts (previously legislated)
The 16% rate reduces to:
- 15% from 1 July 2026
- 14% from 1 July 2027
Medicare levy thresholds to increase from 1 July 2025

These measures aim to provide modest cost-of-living relief and reduce compliance burden.

Other Measures

Electric vehicle FBT concessions to be phased down, moving to a 25% concession from 1 April 2029
PAYG instalments expected to become more dynamic and software-driven from 1 July 2027
Foreign resident CGT changes expanding the definition of taxable Australian property (including retrospective elements)
Pillar Two global minimum tax alignment from 1 January 2026

Economic Context and Policy Direction

The Budget reflects a broader policy shift focused on:

Productivity and investment in innovation
Housing supply and generational equity
Energy security and economic resilience
Fiscal sustainability and revenue integrity

Key structural themes include:

Reduced reliance on tax concessions for asset-based wealth (property and trusts)
Increased focus on labour income support and business investment
Measures aimed at encouraging capital into productive economic activity

DLK Advisory Commentary

The 2026 – 27 Budget represents a material shift in Australia’s tax landscape, particularly in relation to capital taxation and private wealth structures.

While the measures are significant, they are largely targeted rather than forming part of a comprehensive tax reform framework. This raises the potential for increased complexity and unintended interactions between rules.

Importantly:

Many measures are not yet legislated
Transitional rules and detailed design will be critical
A backlog of announced but unenacted measures continues to create uncertainty

What This Means

Clients should consider:

Reviewing long-held investment positions, particularly in light of CGT reform
Assessing property investment strategies and gearing approaches
Re-evaluating trust structures and distribution strategies
Modelling the cashflow and tax impact of proposed changes ahead of implementation

Next Steps

DLK Advisory recommends:

Early engagement to model the impact of proposed reforms
Identifying opportunities for restructuring or repositioning ahead of commencement dates
Monitoring ongoing consultation and legislative developments closely

DLK Advisory will continue to provide updates as further detail becomes available.

Introducing ATO SmartDocs

Admin 2nd April, 2026

We’re excited to introduce an important enhancement designed to make managing your ATO correspondence even more secure and efficient.

From Monday 14th April 2026 DLK Advisory will utilise ATO SmartDocs, a secure digital platform that strengthens how we deliver ATO mail and communications. This enhancement ensures every exchange with our clients remains seamless, efficient, and protected.

What this means for you:

Enhanced Security
Protected by advanced safeguards, including two‑factor authentication (2FA), ensuring your information remains confidential at every step.

Faster Turnaround
ATO documents are processed and delivered promptly, reducing wait times and improving response time.

Streamlined Process
We’ve refined how ATO mail is managed, helping you spend less time on paperwork and more on what matters most.

Sustainable Practice
Supporting our continued commitment to reduce waste and operate responsibly.

How it works:

When new ATO mail arrives, you’ll receive an SMS notification
Log in to your email and use a 6-digit verification code to securely access your documents.
To ensure smooth delivery, please confirm we have your current email and mobile number.
All correspondence will be sent from admin@dlkadvisory.com.au. Please add this address to your safe sender list to prevent any delivery issues.

➡️ Quick video to access ATO documents

Video not loading? Please click here for written login instructions.

Frequently asked questions

Why have I received an SMS but no email?
Digital delivery requires both a valid email address and mobile number. Please check your junk folder or contact our office to confirm your details.

Why have I received an email but no SMS?
This may indicate your mobile number is outdated or incorrect. The document cannot be accessed without the SMS code, so please contact us to update your details.

I am receiving paper correspondence, how do I switch to digital delivery?
We may not have your current contact details, or you may have previously opted for paper delivery. Please contact us to update your preferences.

Can I continue receiving paper mail?
Yes. While we encourage digital delivery for its security and convenience, we are happy to accommodate your preference.

Can I reply to the email I receive?
No, these emails are sent from a no-reply address. For assistance, please email admin@dlkadvisory.com.au or call our office on 03 9923 1222.

Travel expenses: What you can and cannot claim on your income tax return

Admin 31st March, 2026

Understanding which travel expenses are deductible can save you money and prevent disputes with the ATO. Recent court decisions and ATO guidance have clarified the boundaries, making it crucial to know where you stand.

What travel expenses are generally deductible?
Travel expenses incurred in the course of your work or business operations are deductible under general principles. These may include: motor vehicle expenses, including parking fees and tolls; car rental costs; air, bus, train, ferry and taxi fares; accommodation and meal expenses when work duties require travel; and travel between different work locations that are not your home. The key requirement is that the travel must be undertaken while gaining assessable income and not be private or domestic in nature.

Travel between work locations
You can claim expenses for travelling between work locations, provided neither location is your home. This includes travel between: different workplaces of the same employer; client premises; and other locations where you perform employment duties. However, you cannot claim deductions where you make a private decision to work from another location merely because it’s convenient.

What you cannot claim
Several categories of travel expenses are specifically non-deductible:

Home to work travel
The fundamental rule is that expenses for travelling between home and work are not deductible. Recent court decisions have significantly impacted fly-in fly-out workers. If your employment contract specifies the remote airport as your point of hire, you cannot deduct travel costs from your home airport to the remote workplace airport. The expenses are considered getting to work, not working.

Job-seeking travel
Travel expenses incurred while looking for a job are not deductible, nor are travel expenses for acquiring tools and equipment.

Residential rental property travel
You cannot claim travel expenses related to residential rental properties, including travel to collect rent, inspect properties, or conduct maintenance. This restriction applies unless you’re carrying on a business or are an excluded entity such as a company.

Overseas travel complications
The ATO scrutinises overseas travel expenses carefully, particularly if you’re accompanied by a spouse. Generally, visa costs, passport expenses, and travel insurance are not deductible.

Accompanying relatives
If a relative accompanies you on business travel, their expenses are not deductible unless they’re an employee undertaking separate work or work incidental to yours.

Limited exceptions to the home-work rule
Some exceptions allow deductions for home-work travel: transporting bulky equipment that cannot be securely stored at work; itinerant workers who travel to various locations as part of their employment; and professionals with a recognised base at home, such as some musicians and footballers. A recent case involving a radio presenter working from home during COVID-19 restrictions allowed deductions for travel to studios, though the ATO has appealed this decision.

Substantiation requirements
Remember that claiming deductible travel expenses requires proper record-keeping. For travel involving overnight stays, you’ll need written evidence and potentially travel diaries for trips of six or more consecutive nights.

Get professional advice
Travel expense deductibility involves complex interactions between employment law, tax law, and your specific circumstances. Recent court decisions show how contractual arrangements can significantly impact your tax position. If you regularly incur travel expenses for work, it’s worth reviewing your situation with a tax professional to ensure you’re maximising legitimate deductions while avoiding potential disputes with the ATO.

A reminder for employers as the FBT year draws to a close

Admin 24th March, 2026

Fringe benefits tax (FBT) operates on its own reporting cycle. Instead of following the standard income tax year, the FBT year runs from 1 April to 31 March. With 31 March 2026 approaching, employers may want to review any benefits you’ve provided to your staff during the current FBT period.

Understanding fringe benefits tax
FBT is a tax that applies to certain benefits employers provide to their employees or their employees’ associates. Unlike income tax, which is paid by your individual employees on their earnings, FBT is paid by you as the employer on the value of specific non-cash benefits. These benefits are often described as employee perks. They can include things such as access to a company vehicle, subsidised gym memberships, parking, entertainment expenses, accommodation costs, or the payment of school fees. However, regular salary or wages, approved employee share scheme benefits, and employer superannuation contributions aren’t considered fringe benefits.

Guidance from the ATO explains which items fall within the FBT rules and which may qualify for exemptions. In some situations, a benefit that might normally attract FBT may be excluded.

Calculating the taxable value of benefits
After identifying which benefits are subject to FBT, the employer must determine each benefit’s taxable value. To do this, the value of the benefit is generally “grossed up”. This step adjusts the value of the benefit to reflect the equivalent salary an employee would need to earn to purchase the item using after-tax income.

Two gross-up rates apply: 2.0802 when the employer can claim a goods and services tax (GST) credit for the benefit; and 1.8868 when no GST credit is available. Where a GST credit is available, the taxable value of the benefit is multiplied by 2.0802, and the FBT rate of 47% is then applied. The employer then lodges an FBT return and pay any tax owing for the year.

Possible tax deductions
While FBT can add an extra compliance step for businesses, there can also be some tax advantages. In many cases, employers who pay FBT can claim an income tax deduction for the amount of FBT paid in the financial year in which the liability arises. Your business may also be able to claim a GST credit and a deduction for the cost of providing the fringe benefit, depending on the circumstances.

Getting ready to lodge
Because the FBT year ends on 31 March, now is an appropriate time to check your business’s records and review any employee benefits provided during the year. Employers who prepare and lodge their own FBT return generally need to do so by 21 May. The deadline may extend to 25 June where the employer is registered as an FBT client with a registered tax agent by 21 May and the agent lodges the return on their behalf.

ATO guidance for electric vehicle home charging now includes plug-in hybrids

Admin 10th December, 2025

Electric vehicles (EVs) aren’t just a novelty in Australian business fleets anymore; they’re becoming a practical reality. But with this shift comes a new challenge: if your business provides electric vehicles or plug-in hybrid vehicles (PHEVs) to employees, for tax purposes you need to account for the home electricity used to charge the cars. How do you accurately calculate these costs without installing expensive separate meters or relying on guesswork?

What’s changed? The ATO has updated its guidance (PCG 2024/2) to include plug-in hybrid electric vehicles, not just pure electric ones. This means businesses can now use the ATO’s simplified method to calculate home charging costs for both types of vehicles. Previously, only zero-emission EVs qualified, but hybrid vehicles are now covered under a seven-step methodology separating electric and petrol kilometres.

The simplified approach for fully electric vehicles is straightforward: multiply your total annual kilometres by 4.2 cents per kilometre. This provides an ATO-accepted figure for home charging costs. For plug-in hybrids, you’ll need to calculate petrol costs, determine petrol kilometres, subtract them from total kilometres, and apply the 4.2c rate to the electric-only portion.

To use this method, businesses must keep accurate records — odometer readings at the start and end of each FBT year (1 April to 31 March) and proof of home electricity expenses, such as power bills in employees’ names. If you haven’t kept these records before, the ATO is offering transitional relief for the 2024–2025 year, allowing reasonable estimates based on service history or other data.

This update streamlines FBT compliance and helps ensure you’re not paying more tax than necessary. If employees pay for charging themselves, the cost can reduce the taxable fringe benefit dollar for dollar. If your business reimburses those costs, you can include the calculated amount in your FBT return. The changes apply from 1 April 2024 (FBT) and 1 July 2024 (income tax), meaning they’re already in effect for most businesses.

Even with these simplified rules, EV-related tax treatment can be tricky. Plug-in hybrids lost their FBT exemption after March 2025, and exemptions only apply under specific conditions. Getting professional tax advice ensures your business maximises available benefits and stays compliant with ATO requirements. Contact us to discuss how these changes affect your business and to make sure you’re getting the best result for your electric vehicle fleet.

FBT and tax considerations for end-of-year parties and gifts in your business

Admin 26th November, 2025

As the end-of-year season approaches, it’s a great time to celebrate with your employees and show appreciation for their hard work throughout the year. However, it’s essential to understand the potential tax implications, particularly concerning fringe benefits tax (FBT), when planning holiday entertainment or gifts for employees.

Understanding FBT on holiday celebrations

FBT is a tax employers pay on certain benefits provided to their employees or employees’ associates (like family members). When planning a festive gathering, such as a Christmas party, it’s crucial to determine if your event might attract FBT.

Here are some key points to consider:

Location and attendees: If your party is held on business premises during a working day and is only for current employees, you generally won’t have to pay FBT on food and drinks. However, if the event is off-site or includes employees’ associates, you might need to consider FBT, unless the cost per person is under $300 and deemed a minor benefit.

Entertainment and gifts: If you provide gifts alongside the party, remember that gifts under $300 per person can also qualify as minor benefits, exempting them from FBT. However, if gifts exceed this amount, FBT may apply.

Including your clients: Costs related to clients attending your event are not subject to FBT. This means you can invite clients without worrying about FBT implications for their expenses.

Calculating the taxable value of entertainment

When it comes to calculating FBT on entertainment-related benefits, you have a few options:

Actual value method: This method involves calculating the actual cost of the entertainment provided to employees and their associates. If non-employees are involved, you need to apportion the costs accordingly. For example, if you host a dinner where employees and clients are present, only the portion related to employees is considered for FBT.

50:50 split method: If you hire or lease entertainment facilities (such as a corporate box or function room), this method allows you to allocate 50% of the total entertainment leasing expenses to FBT, regardless of whether it’s for employees, clients or others. This can simplify calculations but might not always be the most cost-effective approach.

Meal entertainment valuation: If the entertainment involves meals without recreational activities, you can use meal entertainment valuation methods. Options include the 50:50 split or the 12-week method, where you track meal costs over a period and determine the taxable portion related to employees. Both of these options are based on your expenditure on all meal entertainment for all people during the FBT year.

Important considerations

Recordkeeping: It’s essential to maintain accurate records of all entertainment expenses, including costs (total and per-person), recipients and the calculation methods you’ve used. This documentation supports your FBT calculations and ensures compliance.

Tax deductions and GST credits: Generally, if your event is exempt from FBT, you cannot claim income tax deductions or GST credits for the associated costs. This is important to keep in mind when budgeting for your celebrations.

Gifts to clients: If you’re giving gifts to clients, it’s important to note that these are typically not subject to FBT. However, you may be able to claim a tax deduction for such gifts, provided they aren’t classified as entertainment.

Understanding these key aspects of FBT and tax considerations for holiday entertainment and gifts can help you enjoy the festive season with your team without unexpected tax liabilities. If you’re ever in doubt, consulting with your tax professional can provide additional peace of mind.

The truth about FBT and your business’s work ute

Admin 9th October, 2025

If your business provides vehicles for employees to use in their work duties, you may have heard that providing a dual cab ute is automatically exempt from fringe benefits tax (FBT). Unfortunately, that’s not quite right, and believing the myth could leave you with an unexpected tax bill. While dual cab utes can be exempt from FBT, they need to meet specific conditions, and employees’ personal use of work vehicles is an important factor. Let’s break down what you need to know.

Understanding the FBT exemption
Fringe benefits tax is what you pay as an employer when you provide benefits to your employees or their families, like allowing them to use a work vehicle for personal trips. It’s separate from income tax and is your responsibility, not your employees’. For a dual cab ute to be exempt from FBT, two conditions must be satisfied.

Condition one: must be an eligible vehicle
Your dual cab ute needs to be designed to carry a load of one tonne or more, or more than eight passengers (including the driver), or a load under one tonne but not be primarily designed for carrying passengers. Most dual cab utes on Australian roads do meet this first condition, but this alone doesn’t guarantee an exemption.

Condition two: private use must be limited
This is where many businesses trip up. Even if your dual cab ute qualifies as an eligible vehicle, any personal use must be minor, infrequent and irregular (according to ATO definitions). Think occasional trips to the tip or helping a mate move house once in a blue moon. Travel between home and work is allowed, as is incidental travel while undertaking work duties. However, if your employee uses the work ute as the family car for weekend getaways, school runs or regular shopping trips, that’s not limited private use. In these cases, FBT applies even where the vehicle is a dual cab ute.

When FBT kicks in
If your employees’ personal use exceeds the limited private use threshold, you’ll need to calculate the taxable value of the fringe benefit, work out your FBT liability, lodge an FBT return and pay what you owe, and report the reportable fringe benefits on your employee’s income statement or payment summary. The taxable value calculation depends on the type of vehicle and how it’s used. You might use the operating cost method or the cents per kilometre method, depending on your circumstances.

Record keeping
Even if you believe your dual cab ute qualifies for the FBT exemption, you still need to keep records that demonstrate the limited private use condition is met. You don’t need to maintain a formal logbook for exempt vehicles, but you should have some way to show that private use remains minor, infrequent and irregular. This could be as simple as regularly checking odometer readings and comparing them with expected work-related travel. Without proper records, you can’t support your exemption claim if the ATO asks questions.

Getting it right
To reduce the risk of FBT liability, put a clear, written policy in place that limits private use. Compare expected commute distances with odometer readings to spot red flags early, and educate employees about what’s allowed and what isn’t. If you’re unsure whether your situation qualifies for the exemption, consult with your tax professional. We can help you understand your obligations, set up appropriate record-keeping systems and ensure you’re meeting your FBT responsibilities.

Family Tax Benefit and your tax return: some common misunderstandings

Admin 9th October, 2025

Family Tax Benefit (FTB) is a government payment to help families with the cost of raising children. Despite its name, it’s not a tax refund or tax deduction – it’s a social security benefit to help with everyday costs like food, education, clothing and other child-rearing expenses.

FTB has two parts: Part A is the main payment available to most eligible families, and Part B is an extra payment for single parents or certain single-income families (usually where one parent stays home or works part-time). Importantly, FTB is paid by Services Australia (through Centrelink), not the ATO.

To be eligible, you must have at least one dependent child in your care, and: your child must be aged 0–15 years, or a full-time secondary student aged 16–19, in your care at least 35% of the time; your child must be an Australian resident and you (as the claimant) must meet certain residency rules; and your income must be under certain thresholds. FTB is means-tested, and there are income tests for both Part A and Part B payments.

FTB isn’t a tax refund. A tax refund is money the ATO gives back if you’ve overpaid tax during the year, but FTB is a government benefit, separate from the tax system. You don’t automatically receive FTB by lodging a tax return, and it’s not calculated in your tax assessment. Historically, some family benefits were delivered through the tax system, but today Centrelink delivers FTB. Think of FTB as a family assistance payment like the Parenting Payment or Child Care Subsidy, rather than a tax refund or rebate.

To claim FTB, you must apply through Services Australia via your myGov account linked to Centrelink, phone the Families line, or visit a Centrelink service centre. If you’ve just had a baby, hospitals often provide the Newborn child declaration form, which includes a lump sum claim for FTB and other family payments.

You can choose to receive FTB as regular fortnightly payments by estimating your family’s income for the year, with final reconciliation after the year ends, or as an annual lump sum after 30 June using your actual income from your tax return. Lump-sum claims must be made within one year after the financial year ends (e.g., for 2024–2025 you have until 30 June 2026).

During your claim, you’ll provide details about your children and income. If approved, Services Australia will deposit fortnightly instalments into your bank account or process the lump sum after both you and your partner lodge tax returns. All FTB communication, including approval, payment details, and adjustments, is sent through Centrelink, not via your tax return paperwork. Lump sums are paid directly by Centrelink, separate from any ATO tax refund.

If your circumstances change (such as income or care arrangements), inform Centrelink promptly to avoid overpayments or adjustments after end-of-year reconciliation.

FBT: alternatives to employee declarations

Admin 4th April, 2024

From 1 April 2024, employers will have the option to rely on existing or other alternative records as determined by the Commissioner by way of legislative instrument for certain classes of fringe benefits. The instruments do not change or reduce the information employers need to hold or support their FBT return, and only alter the prescriptive format for obtaining that information. In situations w here the Commissioner is not “reasonably” satisfied that adequate alternative records are available, employers are expected to continue using existing approved forms.

Click here to read our article

FBT electric vehicle home charging rate

Admin 23rd February, 2024

With the rise in businesses purchasing EVs for the use of their employees, the ATO has finalised its guidelines setting out the methodology for calculating the cost of electricity when an eligible electric vehicle is charged at an employee’s or an individual’s home. The rate of 4.20 cents per km has been listed as the appropriate figure and will apply from 1 April 2022 and later FBT years. To use this rate, employers will need to keep a record of the distance travelled by car and a valid logbook must be maintained if the operating cost method is used.

Click here to read our article